Hello, welcome to Arista Advice! Question of the week is: "Paul, what's the Augusta Rule?"
Well, yes, the Masters tournament was held over the weekend, and Jon Rahm from Spain was the fourth Spaniard to win the Masters. What was his purse? $3.4 million. That's a lot of money for playing golf for four days. But he's been playing for many years, and he's an Arizona ASU graduate and just a wonderful person. Let's talk about the Augusta Rule.
The Augusta Rule is a part of the tax code that you need to speak with your tax advisors about. There's many parts of it that are applicable, and then there are some parts that are abused, and then there's some parts that you just can't use. Let's take a look at the Augusta Rule 280(A). 280(A) is known as the Augusta Rule, and it says that if a dwelling unit is used during the taxable year by the taxpayer as a residence, and such dwelling unit is actually rented for less than 15 days during the taxable year, then the income derived from the such use of the taxable year shall not be included in gross income.
"How did this come about, Paul?" Well, the Augusta Rule is derived from the Masters at the Augusta National Golf Course, and for many years the property owners who lived on the golf course were living there during The Masters. Large corporations and their lobbyists came and knocked on their doors and wanted to rent their homes, and they said "No way, Jose because we'll have to pay the income if we rent it out." What did those lobbyists and big corporations do? They went back to Congress and got the Augusta Rule implemented. Because of the Augusta Rule from the Augusta National Golf Course where the Masters is played, you can rent it out for 15 days and pay no income on that money that you receive on your primary residence.
Remember, go talk to your tax advisors. We're not tax professionals, but this is a rule and a provision that we see some of our taxpayers and some of our clients using. Always remember to go to AristaWealth.com to get other videos, tools, tips, and resources to help you live a life of significance.