So you saw online about the 𝐀𝐮𝐠𝐮𝐬𝐭𝐚 𝐫𝐮𝐥𝐞? (e.g., renting your home to your business and taking it as a business deduction but without paying tax on the rental income). Remember this:

– You’re limited to 14 days of tax-free rental income… if your business rents your home for 15 𝐝𝐚𝐲𝐬 𝐨𝐫 𝐦𝐨𝐫𝐞, 𝐀𝐋𝐋 𝐨𝐟 𝐭𝐡𝐞 𝐫𝐞𝐧𝐭𝐚𝐥 𝐢𝐧𝐜𝐨𝐦𝐞 𝐢𝐬 𝐭𝐚𝐱𝐚𝐛𝐥𝐞!

– The space rented has to actually be used as a personal residence, but it 𝐝𝐨𝐞𝐬𝐧’𝐭 𝐡𝐚𝐯𝐞 𝐭𝐨 𝐛𝐞 𝐚 𝐡𝐨𝐮𝐬𝐞 𝐚𝐧𝐝 𝐝𝐨𝐞𝐬𝐧’𝐭 𝐡𝐚𝐯𝐞 𝐭𝐨 𝐛𝐞 𝐲𝐨𝐮𝐫 𝐩𝐫𝐢𝐦𝐚𝐫𝐲 𝐫𝐞𝐬𝐢𝐝𝐞𝐧𝐜𝐞. Apartments, condos, mobile homes, and even boats can qualify as long as they are your primary residence, second home, or vacation home.

– In determining fair market value, 𝐜𝐨𝐧𝐬𝐢𝐝𝐞𝐫 𝐛𝐨𝐭𝐡 𝐫𝐞𝐧𝐭 𝐟𝐫𝐨𝐦 𝐬𝐢𝐦𝐢𝐥𝐚𝐫 𝐩𝐫𝐨𝐩𝐞𝐫𝐭𝐢𝐞𝐬 𝐚𝐬 𝐰𝐞𝐥𝐥 𝐚𝐬 𝐨𝐭𝐡𝐞𝐫 𝐜𝐨𝐬𝐭𝐬 such as catering, conference room, projector / IT, Internet, cleaning, repairs, etc.

– 𝐊𝐞𝐞𝐩 𝐚𝐧 𝐢𝐭𝐢𝐧𝐞𝐫𝐚𝐫𝐲 𝐭𝐨 𝐝𝐨𝐜𝐮𝐦𝐞𝐧𝐭 𝐭𝐡𝐞 𝐛𝐮𝐬𝐢𝐧𝐞𝐬𝐬 𝐮𝐬𝐞 𝐨𝐟 𝐭𝐡𝐞 𝐡𝐨𝐦𝐞… purpose of the meeting, attendees, what was discussed, what was resolved, time spent on premises, pictures, etc. The more you substantiate, the better.

– As long as you’ve followed the rules, the rental income is not taxable to you… however, the business is still required to issue a 1099 to you, which means 𝐲𝐨𝐮 𝐧𝐞𝐞𝐝 𝐭𝐨 𝐫𝐞𝐩𝐨𝐫𝐭 𝐢𝐭 𝐭𝐡𝐞𝐧 𝐞𝐱𝐜𝐥𝐮𝐝𝐞 𝐢𝐭.
For more great insight like this, give us a call at (402) 932-8815 and schedule a tax planning appointment!

Sincerely,
W.E. Stevens PC