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Ultimate Tax Reduction Strategies: Personal Residence Write-Offs Every Business Owner Needs to Know

by Clint Coons

June 25, 2024

Turn Your Personal Residence into a Tax-Saving Tool

Many business owners overlook the fact that their personal residence can serve as an effective tool to reduce taxes. By making strategic use of your home for business purposes, you can leverage significant write-offs that most aren’t even aware of. Here are key strategies every business owner should consider to unlock the tax-saving potential of their home.

Key Tax Reduction Strategies Using Your Personal Residence

1. Leveraging Section 280A

One of the most powerful tools available to business owners is Section 280A of the IRS code. This allows you to rent your personal residence to your business for up to 14 days per year, tax-free. Here’s how it works:

If you host business meetings, training sessions, or other official gatherings at your home, your business can pay you rental income for those days. This income is deductible as a business expense for your company while remaining entirely tax-free for you.
Pro Tip: Calculate the rental rate based on the market value for comparable venues in your area. This can add up to significant tax-free income over time, which is especially beneficial for businesses with regular strategic meetings or client events.

This strategy, sometimes called the “Augusta Rule,” can be a straightforward and efficient way to make your personal residence work double duty as a business asset, reducing your overall taxable income.

2. Set Up an Accountable Plan

Another effective way to use your residence for tax reduction is by implementing an accountable plan. An accountable plan allows you to take reimbursable expenses from your business when working from home. Here’s what you need to know:

Create a Written Policy: Outline an accountable plan that details how you’ll be reimbursed for legitimate expenses, like utilities, internet, or office supplies, when using your home for business purposes.
Track Your Days Worked from Home: Keep records of days you work from home to validate expenses. By doing so, you can maximize your deductions without raising red flags with the IRS.

By having an accountable plan in place, you can draw tax-free reimbursements from your business for eligible expenses. This is especially advantageous for small business owners who work from home occasionally or operate home-based businesses.

Going Beyond Basics: Schedule Your Strategy Session

Understanding these tax reduction techniques is crucial for maximizing potential savings. Business owners can benefit from professional guidance to ensure compliance and maximize their deductions. For personalized advice and a deeper dive into leveraging these strategies, consider scheduling a complimentary 45-minute Strategy Session (valued at $750) with an experienced Anderson Advisor.

During this session, you’ll receive a tailored blueprint for using your personal residence to your business’s tax advantage, as well as other strategies for safeguarding your assets and optimizing your tax position.

These expert insights can help you stay compliant while reducing your tax burden significantly, allowing you to keep more of what you earn. Take control of your tax strategy today!

Author Bio

"A big part of succeeding in Real Estate is just assembling the right team around you" ~ Clint Coons

Clint Coons is a licensed attorney, active Real Estate Investor, successful entrepreneur, and published author who specializes in Asset Protection and Business Planning. Clint shares his knowledge and strategies at seminars nationwide with Real Estate Investors, Stock Traders, and small business owners. He is nationally recognized for his ability to take complicated laws or structures and explain them in crystal clear form. He helps his client's protect their investments through his innovative and dynamic approach to Asset Management.

As one of the founding partners of Anderson Law Group, Clint has grown his legal and tax firm to over 400 employees by assisting real estate investors with creating and implementing solid entity structuring plans. His success in these regards is in large part due to his personal investing experience. Taking what he learned growing up in a real estate family, Clint has acquired over 100 properties, from small single family homes to commercial buildings. A prolific writer and educator, Clint has published hundreds of articles, videos, and workbooks on the subjects of real estate investing and asset protection, including his most recent book Asset Protection for Real Estate Investors. Using real-life examples and his personal experiences, Clint knows what really works in investing and what to avoid. A successful attorney, real estate investor, and speaker, Clint has used his innovative and dynamic strategies coupled with knowledge borne from experience to help thousands of people save millions of dollars and build real wealth.