If a taxpayer uses his home to host business events, the taxpayer could rent their home to their business for these events. You’ll need to establish a fair-market value for the property, and follow the usual formalities of renting property. The rent is tax deductible to the business and may be tax-free income to the taxpayer if they rent their home for less than 14 days.
Specific Details
The parents reduced their taxable income by $5,000 by renting their home to their business to host business events. Since the parents income was taxed at the 30% tax bracket, the income reduction may decrease their income taxes by $1,500 ($5,000 x 30%).
Potential Savings
If you are in a combined (federal, self-employment, and state) tax bracket of 30%, you could reduce your taxes up to $300 for every $1,000 of income reduction by renting your home to your business to host business events.