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Talk about a tax deduction that feels too good to be true, but it is in fact valid.
Playing the business owner, Tu responded to the disgruntled employee with the following bold claim.
Because those business owners are idiots, Tu said.
Theyre spending thousands of dollars a night on hotels while the government is going to subsidize our retreat.
Not only is it legal, its tax-free.
What Is the Augusta Rule?
Tus TikTok video highlighted how the Augusta Rule can help business owners make money.
Any rental of a primary residence for less than 15 days is not taxable income, Stranger said.
So, does Tus advice check out?
Stranger pointed out two important caveats that business owners should keep in mind before implementing this strategy.
Business Purpose
To abide by the Augusta Rule, maintaining documentation of business activity is critical.
While the IRS acknowledges the rule, its use is closely scrutinized when homeowners rent to their own businesses.
To avoid any penalties and unwanted IRS attention, its best to diligently follow the regulations in this care.
How Common Is This?
While the Augusta Rule can be a legitimate money-saving tool, Stranger said its not widely used.
So it is not common, Stranger said.
Is It Ethical?
Now comes the bigger question.
From my experience, only some taxpayers are that well organized to do this well, she added.
Thats what makes this jot down of tax advice on TikTok always a little questionable.
Stick to the guidelines and enjoy the extra money in your pocket.
Caitlyn Moorhead contributed to the reporting for this article.
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