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IRC Section 280A(g) Augusta Rule: The Tax Strategy CPAs Need to Know
John Hyre introduces the Augusta Rule (Section 280A[g]), clarifying misconceptions spread by social media. He explains that while most know homeowners can rent their residence for up to 14 days per year tax-free, few realize that the home can be rented to one’s own business, allowing the business a deduction and the owner tax-free income. The rule is legitimate and backed by the tax code when implemented correctly.
Important points:
- TikTok and other online sources often skip the details and documentation required for compliance.
- The key challenge for tax pros is helping clients execute it easily so they actually follow through.
- On our partner call we’ll cover why it’s legitimate, common objections, documentation steps, and audit defense.
- If clients use our method and software-backed service, we’ll defend them in audit or Tax Court at no charge.
To learn more you can book a partner call with us or visit our website.
Video Transcript:
0:00
this isn’t TikTok we’re not going to
0:02
talk nonsense we’re going to talk
0:04
[Music]
0:07
code this is for tax professionals who
0:10
think they know the Augusta rule i think
0:12
we’re going to give you a little bit of
0:13
a different perspective section 280 CAP
0:16
A allows you to rent out your personal
0:19
residence for up to 14 days per year
0:22
tax-free you probably knew that there’s
0:24
a little bit of a tilt on this the
0:26
Augusta rule as often applied is to rent
0:29
the home not to strangers which many
0:31
people many of your clients won’t do but
0:33
to rent the home tax-free to one’s own
0:36
business the business gets the tax
0:38
deduction the income is tax-free and
0:41
this is backed up by code we’re going to
0:43
discuss the strings and the details and
0:45
why it is legitimate if done correctly
0:48
and that’s where Tik Tok is so lacking
0:50
they leave out the important details
0:52
that we need to inform our clients of
0:54
we’re going to walk through those why is
0:56
this legit what are the objections and
0:58
the problems how do we get past them and
1:01
most of all how do we make it easy
1:03
enough for the client to actually do it
1:06
it’s so frustrating to give clients tax
1:09
advice that’s great tax advice they just
1:11
won’t do for whatever reason so I want
1:14
to walk through why it’s legit why
1:16
section 280 which is designed to harm us
1:19
in most cases actually helps us when it
1:22
comes to this rule and we’ll cover other
1:24
related rules for example entertainment
1:26
facility issues should we 1099 we’re
1:29
going to go granular on this because
1:31
this is not really gray there’s really
1:34
not much liability here i recommend it
1:36
to my clients as long as they do it my
1:38
way i’m so convinced that this is really
1:41
black and white with very little gray if
1:43
done properly i am willing to defend
1:46
clients in tax court or in an audit
1:49
without charging that’s how clear this
1:52
is in the code if you would like a means
1:55
to help your clients do this in an easy
1:58
fashion that is compliant and that also
2:02
if they do it right and check every box
2:04
and we’re going to give them a few where
2:06
we would actually be willing to defend
2:08
them in an audit or in tax court without
2:11
billing then please contact us please go
2:14
to the austare rule.com both for
2:18
detailed information on why this is
2:20
legitimate why your clients should be
2:22
doing it and how we can make it a lot
2:24
easier for them and for you sign up at
2:27
theaugustarrule.com
2:28
[Music]
0:07
code this is for tax professionals who
0:10
think they know the Augusta rule i think
0:12
we’re going to give you a little bit of
0:13
a different perspective section 280 CAP
0:16
A allows you to rent out your personal
0:19
residence for up to 14 days per year
0:22
tax-free you probably knew that there’s
0:24
a little bit of a tilt on this the
0:26
Augusta rule as often applied is to rent
0:29
the home not to strangers which many
0:31
people many of your clients won’t do but
0:33
to rent the home tax-free to one’s own
0:36
business the business gets the tax
0:38
deduction the income is tax-free and
0:41
this is backed up by code we’re going to
0:43
discuss the strings and the details and
0:45
why it is legitimate if done correctly
0:48
and that’s where Tik Tok is so lacking
0:50
they leave out the important details
0:52
that we need to inform our clients of
0:54
we’re going to walk through those why is
0:56
this legit what are the objections and
0:58
the problems how do we get past them and
1:01
most of all how do we make it easy
1:03
enough for the client to actually do it
1:06
it’s so frustrating to give clients tax
1:09
advice that’s great tax advice they just
1:11
won’t do for whatever reason so I want
1:14
to walk through why it’s legit why
1:16
section 280 which is designed to harm us
1:19
in most cases actually helps us when it
1:22
comes to this rule and we’ll cover other
1:24
related rules for example entertainment
1:26
facility issues should we 1099 we’re
1:29
going to go granular on this because
1:31
this is not really gray there’s really
1:34
not much liability here i recommend it
1:36
to my clients as long as they do it my
1:38
way i’m so convinced that this is really
1:41
black and white with very little gray if
1:43
done properly i am willing to defend
1:46
clients in tax court or in an audit
1:49
without charging that’s how clear this
1:52
is in the code if you would like a means
1:55
to help your clients do this in an easy
1:58
fashion that is compliant and that also
2:02
if they do it right and check every box
2:04
and we’re going to give them a few where
2:06
we would actually be willing to defend
2:08
them in an audit or in tax court without
2:11
billing then please contact us please go
2:14
to the austare rule.com both for
2:18
detailed information on why this is
2:20
legitimate why your clients should be
2:22
doing it and how we can make it a lot
2:24
easier for them and for you sign up at
2:27
theaugustarrule.com
2:28
