You are an owner in a small business. The business rents your residence or vacation home. The management team will use it as a planning meeting or event. 14 Days or less per property per year.
*The business rents your residence or vacation home at fair market rent.
*The business can deduct the price of the rental as a legitimate business expense.
You and the business should keep records that showed the business paid market rent for the rental . You can do this by getting rental quotes from similar locations. You should also keep record that the management team performed business duties while using the rental. (Invoice, Meeting Minutes, W9,1099-Misc, Schedule E)
Make sure to keep meeting minutes or records that show what strategic decisions were made.
**Need a Meeting Form? Meeting Minutes Form.pdf**
Below are the IRS links we’ve gathered for you, so you don’t have to do the research yourself
Make sure when taking this deduction that it is documented, Ordinary & Necessary, FMV.
By allowing the business to take a deduction for the rental expense and allowing you to exempt that rental revenue from taxable income, the Augusta rule effectively lets small business owners “double dip” on this benefit. This means that the Augusta rule can be a great tax planning tool for both businesses and business owners.
https://www.irs.gov/taxtopics/tc415
https://www.irs.gov/pub/irs-pdf/p527.pdf
The material discussed on this page is meant for general illustration and/or informational purposes only and is not to be construed as investment, tax, or legal advice. You must exercise your own independent professional judgment, recognizing that advice should not be based on unreasonable factual or legal assumptions or unreasonably rely upon representations of the client or others. Further, any advice you provide in connection with tax return preparation must comply in full with the requirements of IRS Circular 230.
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