Mark Kohler explains the Augusta Rule, which lets you rent an employee's home for up to 14 days to host a company event. The homeowner gets tax-free income, your business deducts the rent, catering, cleaning, and entertainment. He walks through an example of renting a colleague's backyard for a company party.
Chapters
Some of you are familiar with the Augusta rule, sometimes abused in circles in the tax planning community. And basically what it is, is you're going to rent your home to the business up to 14 days a year and take a tax deduction in the business. And it's tax free income to you, the homeowner, the owner of the business. Now, it's fraught with abuse, but it's also, it's used on a regular basis legitimately. Now this is one that's perfect. I actually was trying to lobby Matt on this last year. He's got a cool pickleball court in his backyard and I was like, let's do the company party at your house and we'll have food brought in, catering, extra work, cleaners, whatever, for a variety of reasons, didn't work. But that would be an opportunity to say, okay, we're going to rent the home from Matt instead of a hotel, which is totally logical. And you'd go out on the Airbnb circuit or whatever and find out what would a similar home run me to get? Because most people don't do a one day rental for this reason. So you'd have to rent it for a couple of days and then, you know, decorations, all those goodies. But that would be an opportunity to take an additional tax deduction. So you hold it at home, reimburse yourself for the use of your home, get a write off in the company at 100%, put it on the rent line, FYI, and then you have your expenses on top of that. You can have a DJ, you can have entertainers, we could have food and 100%.
