(upbeat music) – Hello, and welcome to another episode of “Coffee with Carl.” I’m your host, Carl Zoellner, once again, one of the attorneys with Anderson Business Advisors. So, grab your coffee, and
let’s talk about 280A today. So, I’m sort of looking
at the picture now, and I can tell (chuckles) may kinda blend in to the actual picture. I don’t think anybody necessarily would want to rent, be
living in that property, but it’s gonna feed into the
conversation we have today, so I liked the picture for this use. So, 280A is one of
those awesome deductions that are out there or and awesome, quite frankly, tax-free
or unreported income tools out there that’s not really
used as much as it should be. We talk a lot about it at
Anderson Business Advisors, and if you’re one of our clients, we even have a 280A kit
on our platinum portal in the form section so that
you can actually use it, and it’ll take you through the scenario. I just wanted to touch on
some of the high points and talk about some of the things that we like to use it for, as well as a couple of the
issues that you might run into or that you wanna have addressed. As always, if you have a
question or additional questions after this please give us a call we’re happy to answer them for you. So section 280A. Section 280A provides
up to 14 days of rental of a dwelling unit
without having to report the income from that rental. So for those of you who are active, have an active business
or invested in real estate and have a corporation. And by the way, most
people if you’re watching the coffee with Carl is
know that you should have a corporation at this point. What’s really interesting is I can rent my personal residence to my
corporation to hold a meeting, and I can actually take 14 days
worth of that rental income as cash or you know, cheque or however it gets in your pocket without having to report
it under that section 280A. Now it’s a goal I always
considered the gold standard to rent your personal
residence to your corporation ’cause number one, it’s a
deduction to your corporation. And like I mentioned, number
two, it’s unreported cash in your pocket, which is great, right? Zero tax implication. The other thing that we like to do with this is especially if
you have elderly parents or say maybe even college age kids are need to get money to them. It also now gives us an additional
way to funnel those funds to those people with pre-tax
dollars versus post-tax. So meaning my corporations earning money, it’s renting that residents
from that taxpayer remember up to 14 days, and I get a deduction
from the corporation side. If I’m doing it for myself,
or for my own bank account, it means I’ve already
paid taxes on that money. And so now I’m say take, if
I’m in the 24% tax bracket take about 24% off the top of that dollar, versus giving that same
dollar to those people that you want to help without having to take that 24 cent hit on every dollar you give them. Now, people always tend to wonder, well, how much benefit
can I get out of this? Well, this is where it
comes into back to that kit where we talk about you have to know what your daily rate would be. And how do you find your daily rate? Well, what you do is you call hotels and you’re just same general
area, get three quotes. And then you take, you know, the median of those three quotes and that’s what you charge
for the daily rental. So when you call in to the hotels, of course, you don’t say, you know, no, you don’t want the triple a discount. No, you don’t want the senior discount. You tell them about how many people you’re going to have in your meeting. Are you going to require refreshments? Are you going to provide snacks? Do you need an audio visual
package at your house of course your audio
video packages is your TV. Or some link to computer
somehow so you can show whatever you’re presenting to your group. But it’s one of those items
that we really like to use because it really does give
you a lot of flexibility in a way to take advantage of having that additional taxpayer in your entity mix or in
your entity structure, that additional taxpayer
being your C Cooperation or S Cooperation. For most beginners in real
estate or quite frankly, for a lot of people who just want that extra little bit of control, we’re gonna use a C Cooperation. So there’s tonnes of videos I’ve talked about some differences between the season S and they’ll
be subsequent videos right going into a little
bit more detail as well. However, like I said, if you wanna talk about the 280A this time. Summary of the whole deal is
a great way to put tax free cash into your pocket, as well as take a deduction
on the corporate side. So if you can wear the IRS
gives us an opportunities to double dip we suggest taking advantage of those opportunities and we’re happy to help you do it. So, as always, if you have more questions if you are a client of course, always feel free to use
your platinum portal to ask questions, schedule an appointment, do whatever you need to do. If you’re not a client, but
you’d like to know more, please give us a call. Always happy to have that
free initial consult. As well as please look
it up the content we have on our Anderson Advisors YouTube channel. There’s a lot of very high end stuff and there’s some of this
frequently asked question portion. I like the frequently
asked question portion. And that’s why I do the coffee with Carl, because I find that those are the most frequently asked questions (laughs). So until next time, it’s been a pleasure having
you here with coffee with Carl and we’ll catch you on the next episode. (upbeat music)