Living Well This weekend marks one of my favorite times of the year... the Masters Tournament.
Every year, visitors flock to Augusta, Georgia for the tournament. I own a home right by the course where they hold the Masters, probably the most coveted championship in golf.
Many years ago, the very wealthy course owners called their buddies in D.C. and, in exchange for the incredible hospitality of the locals, convinced the federal government to exempt two weeks (technically, 14 days) of rental income from their homes every year. That way, they could rent out their homes tax-free to these visitors.
And for more than 10 years, I've used this loophole, which I call "the Masters exemption," on my home in Augusta.
You heard it right... I rent my home for the week of the Masters and recoup nearly four months of mortgage payments, all tax-free. (In fact, it's technically not an exemption at all. The IRS classifies the rent as "nontaxable income.")
It turns out the IRS allows anyone to rent his property for up to 14 days each year and pay no taxes on the rental income. That's why it's also known as the "14 day" rule. This exemption allows you to rent out vacation property two weeks (14 days) a year, tax-free.
And there's no limit on the amount. If you have property that's not being used, be sure to take advantage of one of the IRS' best and easiest loopholes.
This includes second homes. It's a great way to pay for annual taxes or upkeep on a second home or investment property. This is what I do with my home in Georgia.
For this year's tournament, I'm renting my home out to Mario Tiziani from MGC Sports. He's also the brother-in-law of one of the top 50 golfers in the world.
If you have property near an area that has a peak season, be sure to take advantage of it. Consider what's going on in your town, and maybe you can take advantage of this deal. Perhaps you're in a city hosting a Super Bowl, World Series, or any sort of professional championship. Whatever the season or location, I'm sure there's an opportunity for you to easily get some tax-free income.
Of course, if you already rent your property out the rest of the year, just be sure to have a clause that requires your tenants to vacate the property during the popular time. This is how many of the homeowners in Augusta do it – they have leases requiring people to vacate around the tournament.
So please... remember that this is an incredible deal, and it's not just for landowners in Augusta. You can take advantage of the Masters exemption anywhere. I know people who earn enough money every year to pay for the yearly property taxes and upkeep on their own home, and you can too.
What We're Reading...
- Read more on IRS' rules on renting out your home.
- Five things you should know about before the Masters.
- Something different: The strongest cup of coffee in the world.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Retirement Millionaire Daily Research Team
April 5, 2017
P.S. On Wednesday night Porter hosted an emergency briefing with the "Metropolitan Man" and unveiled a scenario that could change the balance of power in the U.S. for decades to come. To listen to the full briefing, click here.