Tax Exemption with Rental in Augusta

The Internal Revenue Code (IRC) of Augusta, Georgia, has established an important rule that provides relief to property owners and offers significant support for their personal financial resources.

Section 280A of the code suggests that anyone who owns a property and wishes to rent it without having to report the earnings from the contract may do so for 14 days a year. That is, during this time, a property can be rented without paying taxes on rental income in the federal tax return.

The measure was specifically implemented in the city of Augusta due to the high demand for housing during certain seasons, particularly when events such as the Super Bowl, March Madness, or the Masters Golf Tournament—one of the most important tournaments in the United States—take place.

The Augusta Rule, as it is called in the IRC, allows residents to rent their homes during these events and generate tax-free income and deductions when renting their personal or vacation homes.

However, for property owners to benefit from this measure, they must understand some guidelines and rules if they wish to make a tax exemption on their eventual taxes.

The first rule, according to the regulation, is that the property being rented cannot be considered the owner’s primary residence or a source of income. In other words, if the property is registered with a rental contract for periods longer than 14 days, it would already be considered an additional or investment income for the owner and would be subject to taxes.

Therefore, the exemption will apply as long as the property is rented for no more than two weeks, and the owner uses it personally for more than 14 days during the taxable fiscal year. For example, if a person owns a vacation home, they can rent it for only 14 days without having to report the earnings in their taxes.

Although this provision is mostly observed during the competition season in the city, it can also be applied to rentals for meetings, conventions, or social events, as long as the total rental period does not exceed 14 days per fiscal year. If the owner has a business registered as a corporation, partnership, or LLC and files its own return, that owner may make the tax deduction for the business without reporting the earnings on their personal tax return.

The second rule to consider to benefit from this tax exemption with rental is that the rental amount must be reasonable and aligned with market rates.

The third and final rule refers to the location of the property subject to the rental agreement. The property must be within the country, as a tax exemption cannot be requested for a foreign property.

Available Foreclosures:

Augusta: 25 homes available.

Lake Resort Area: homes available.

By Elias DaSilva | September 24, 2024.