No this is not some infomercial trick or radio enticement to drag you to a special course that has ‘limited seating’ so call now. Plain as day in section 280A(g) of the US internal revenue code lies a way to rent your own residence and not be taxed on that income. What is the catch? Well…it is more like qualifications.

First, the property has to be your residence. That is defined in the US tax code as a place that you live for more than 14 days a year. So, this place could be your primary residence or a second home.

Second, you cannot rent the property for more than 14 days a year. Renting it the 15 day makes all of the income taxable. So, this rule really limits the pool of people who could use this benefit.

Third, you cannot deduct any expenses for the rental use either. Therefore, if you have cleaning expenses from the rental you cannot deduct them. However, you can still deduct the mortgage interest and real estate taxes subject to normal limitations.

This method is a way for people to rent out their second home or their primary residence for a little bit of money each year. As I hear some resident of Augusta, GA use this section of the code to pocket tax free rent when the Masters tournament is in town.

This post is for informational purposes only and is not considered tax advice. If you have questions about this benefit or other ways to save on your taxes please feel free to contact me.

-Dan

Dan Busenbark
dan@wrightcpagroupllc.com
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