The tax code didn’t change. The rules didn’t change.
But the way it’s being explained online? That’s a different story.
John Hyre, 30-year tax attorney and Augusta Rule expert, shares what’s actually true about Section 280A(g) and why the rise of “influencer tax advice” is doing more harm than good here.
If you’ve ever been told “just rent your house to your business and boom – free money,” you’re missing 90% of the real story. This is a real strategy. But there’s a right way to do it and a whole lot of wrong ones.
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specifically, this has been something
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you’ve been teaching for years now. Um I
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think I learned it from you in 2014. Um
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and has that rule changed at all in the
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your entire tenure in law?
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The rule hasn’t changed. The way it’s
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been presented lamentably has
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Okay.
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Uh Tik Tok has been acidic to quality
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content in the tax world in general. Uh
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tax practitioners
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get a bit hot and bothered over some of
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what’s out there. So there’s a lot of
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very lowquality content. In fact, right
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now, I’d say that’s the main font of
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Augusta information, which is
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lamentable.
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Yeah.
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The actual rules themselves have not
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changed. They’ve always been always been
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fairly straightforward, fairly simple by
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my standards.
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In fact, what I like is that the statute
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that gives birth to the Augusta rule.
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The way it was designed was was to harm
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you. It said one of the main portions of
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the statute, it’s code section 280
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capital A, says that if you spend too
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much personal time, typically 14 days,
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there are other rules, but let’s go with
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the easy one. 14 days personal time on a
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rental property, you cannot take the
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losses. And people don’t know this. They
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spend all this rental time, and if they
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were to get audited and that were to be
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discovered, especially because the
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definition of personal time is so broad.
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It includes relatives time. It includes
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when you rent the thing below fair
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market value. It includes time for
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charity.
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Yeah. They’re trying to make make it
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happen. They’re trying to like make it
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easier
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and it helps us. So for most of that
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statute,
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it really sticks it to people who
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inadvertently spent what they did not
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think common sensically because law and
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logic have nothing to do with each other
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except iteration. The letter L. That’s
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it.
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And so common sensically,
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what you would consider to be personal
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time is actually much broader than that.
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And so it traps a lot of people and they
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lose their deductions.
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Yep. For us, it’s helpful because that
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same definition makes so many properties
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personal residences
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where you can take the 14 days of
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rentree income that that the same thing
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they designed to stick you helps us.
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Yeah.
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I like that. I love it’s judo.
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Yeah.
