Rental Income that’s Tax Free [Video]

You can get tax-free income from renting out your home.

Section 280A(g) says:
• if you use a dwelling unit as a residence,
• and you rent it for less than 15 days out of the year,
• you can pocket the money without paying any federal income tax.

A dwelling unit could be a house, apartment, condo, mobile home, or even a boat.

The only downside is that you can’t deduct any costs related to renting the place out.

Now if you have a business, you could rent your residence to your business.
• You get tax-free income
• The business gets a tax deduction

But there are caveats:
• There must be a valid business purpose
– A shareholder meeting, a company retreat, a meeting with a client, etc.
– Make sure you’ve got documentation (a signed contract)
• The rental rate must be fair market value
• And the business can’t be a sole proprietorship or a single-member LLC

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