Two weeks of tax-free income!

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Have you ever wanted to earn money tax-free? It sounds crazy, but there is actually an easy way for you to do this. You just need to rent out your house out for less than 15 days. You can’t deduct any expenses, but the income is tax-free. AirBnb and VRBO are some sites to find clients.

If you prefer not to rent out your home to complete strangers, you can also rent it out to your business. Now the rent needs to be reasonable and comparable to what you would find in the market. Your business will get the tax deduction, and you personally won’t pay tax on the income. Why would your business need to rent your home? Maybe you have a monthly meeting or a business retreat a few times a year. As long as the use is reasonable and needed for business purposes, you should be fine. You do need to meet a few requirements but nothing that’s too difficult.

It’s a smart way to shift business income or make some money while you aren’t using your home!
From the IRS: Used as a home but rented less than 15 days.   If you use a dwelling unit as a home and you rent it less than 15 days during the year, its primary function is not considered to be rental and it should not be reported on Schedule E (Form 1040). You are not required to report the rental income and rental expenses from this activity. The expenses, including qualified mortgage interest, property taxes, and any qualified casualty loss will be reported as normally allowed on Schedule A (Form 1040). See the Instructions for Schedule A (Form 1040) for more information on deducting these expenses. http://www.irs.gov/publications/p527/ch05.html#en_US_2014_publink1000219202 You can find more in the IRS code section: 26 U.S. Code § 280A

 

 

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