Tax Reduction Podcast

Episode 36. Beach Home Tax Strategy

• Boris Musheyev • Episode 36

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Do you want to buy a vacation home and write it off on your taxes? Whether it's a beach house, ski cabin, or a lakeside condo, the real question isn’t can you deduct it — it’s how to write it off as a legitimate business expense.

In this podcast, I reveal one of the most underused IRS-approved tax strategies: turning your personal vacation home into an employee entertainment facility that’s 100% tax deductible. Yes — your dream property could become a fully tax deductible business asset if you structure it the right way.

I walk you through the IRS guidelines and show you exactly what steps to follow so your beach house qualifies as a tax deduction, not a personal expense. If you’re looking for tax strategies and ways to save money on business taxes, this is one videos you don’t want to miss.

I've put together this FREE resource for you:

7 Write-Offs Every S-Corporation Business Owner MUST Know
🆓 Download FREE PDF here: https://7taxwriteoffs.com/?el=podcast&htrafficsource=buzzsprout

Ready to start saving money on your taxes?
☎️ Schedule your FREE Tax Advisory Session: https://taxplanningcall.com/?el=podcast&htrafficsource=buzzsprout

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*Disclaimer This material & presentation content is for informational and educational purposes only. This material and presentation content is designed to provide general information regarding the subject matter covered. It is not intended to serve as legal, tax, or other financial advice related to individual situations. Because each individual’s legal, tax, and financial situation is different, specific advice should be tailored to the particular circumstances. For this ...

Speaker 1:

If you are looking to buy that beach home and you're thinking, can I write it off my taxes as a business use, the question that you should be really asking is not can I write it off, but how can I write it off? That is exactly what we're going to talk about. Is that how can you write off your personal beach house, condo by the ocean, overlooking the ocean, a ski cabin, whatever that may be? How can you write it off as a business expense and get a 100% tax deduction?

Speaker 2:

Welcome to the Tax Reduction Podcast for money-making entrepreneurs with Boris Mushaev. Boris has helped entrepreneurs across the United States collectively save millions of dollars in taxes with the power of tax planning and advisory. The only way you, the business owner, can save money on taxes is by using proactive tax strategies, and this podcast is all about saving you money on taxes. Boris will share with you in-depth and easy to understand tax reduction strategies that you can implement in your business within 30 days or less. Let's jump into today's episode.

Speaker 1:

All right, welcome back and let's talk about how can you make your beach home a tax deduction which is 100%. Before we continue, we have to understand rules. Now here's the thing. Obviously, if you buy a personal beach home, then it's a personal expense. It is not a tax deduction. The question really becomes how do we make it a tax deduction? So, if you follow IRS guidelines and actually this personal purchase that you had, if you convert it or designate it as an entertainment facility for your employees because it is now an entertainment facility for your employees it now becomes 100% tax deductible. But there are rules that you have to follow. These rules are simple and that is what we're going to define.

Speaker 1:

All right, first of all, I want to make sure that we understand the terminology. Now I feel like I'm a college professor here. It's very, very important and I want to make a huge disclaimer. You need a tax advisor that you're going to do this. Now, this is for educational purposes only, so that you, the profitable business owner, can know wow, I can do this and how do I do this. And you need a tax advisor. So if you've got a tax preparer, you don't have an accountant that you work with and strategize on a consistent basis, then please do not implement this strategy on your own. All right, let's get the terminology in. I'm going to refer to this. This is my own terminology. We're going to have executives and we're going to have regular employees. We need to know the difference between both of these in order to understand how to use this tax strategy. So the IRS says look, if you want to designate your beach home as a entertainment facility for your employees, then your regular employees have to benefit from it more than your execs. All right, executives Now, who are considered executives?

Speaker 1:

So, for the purposes of this strategy, irs says you are considered an executive. If number one, you are an owner. Okay, again, these are not the people that cannot use it. They just have to use it less than the regular employees, and we're going to talk about the use test and how that works in a second. So the owner is considered the executive. All the immediate family members. Actually, I'm not even sure if grandchildren considered immediate. I guess they are All right. So it's basically your spouse, your children, grandchildren, grandparents, whatever that is. So they're considered executives. They may not work for you in the business, they may have nothing to do with you in your business, but because they're related to you, they're considered executives. The second executives are anybody that owns 10% or more of the business they are in this bucket right here and we've got looking down for my notes, let's see and also anybody that is making $135,000 or more. They are considered executive. So we've got owners, family of the owner members, $135,000 and plus salary, and more than 10% owners. They are all executives. Everybody else that's left over are regular employees. So we've got that definition.

Speaker 1:

Now IRS says look, if you want to designate this as an entertainment facility, then the regular employees have to use it more than the executives and the rule has to be 51% of use versus 49% of use. So let's do a quick example. We have 365 days in a year. You're paying expenses for this facility for the entire 365 days. Now your employees regular employees use this facility for 50 days out of the year. You, on the other hand, use it for 40 days out of the year, so altogether that's 90 days. So IRS says your regular employees use it more than the executives. All the expenses for the entire 365 days becomes a tax deduction. Wow, what an amazing tax strategy. More to say about it. And how can you reimburse yourself? How can you structure everything right after this break?

Speaker 2:

If you have a tax preparer and you do not have a tax advisor, the only way you can save money on taxes is by using proactive tax planning strategies that only a tax advisor can give you. Bora's put together a free PDF for you, the business owner Seven tax write-offs every S-corporation business owner must know. In this PDF you can find seven tax strategies that you can start using in your business to instantly start saving money on taxes. Click on the link in the description below for a free download.

Speaker 1:

Cool. Welcome back after this break. Now let's talk about how can you structure this. Click on the link in the description below for a free download. Buy it under your personal name and then designate it as an entertainment facility for your employees. Then, under the rules of the accountable plan what is an accountable plan? You can reimburse yourself for the use of this facility. So we've got your business that is making money, you've got employees and a lot of great things are happening. Then you've got this beach home that you purchased. You designate it as an entertainment facility for your employees.

Speaker 1:

Beach home that you purchased. You designated it as an entertainment facility for your employees. You meet the 51-49% rule and you pay for all of these expenses personally, so not from the business personally, whatever it is property tax, mortgage insurance and whatever that may be. Okay, you're paying for all of that. Now the business is going to reimburse you. The owner, tax-free Business is going to get a deduction. You do not pick it up as an income. You have this beautiful beach home that you're writing off your taxes Pretty, pretty cool, okay. So make sure you follow these rules. But again, I cannot stress enough how much you need a tax advisor. Don't do this on your own. Don't do this with an accountant that is incompetent, doesn't know how to do this, never heard of this or tells you it's a red flag. Just tell them to look up the loss.

Speaker 1:

Now, the last thing I wanted to talk to you about here is proof of use. You've got to prove to the IRS that you've used it. What if there is an audit? By the way, is this something that's going to trigger an audit? No, an audit can be triggered by many things, or can be a random audit. This is just a reimbursement to you. You might be asking, boris, how do I report that reimbursement, employee benefits right, it could go on an employee benefit section of your tax return. Now, proof of use you have to keep a log. Make sure you keep a log that employees are signing in and signing out, that they're using this facility and that remember the executives versus regular employees. Regular employees should be using it less than the executive, and that is what your law is going to show.

Speaker 1:

Now there has been some court cases around this and the IRS said no, you've got to meet the use test because there was a court case. I think I don't remember which one exactly it was, but they talked about. The owner was deducting it, but he was using it more right. The executives were using it more than the regular employees. But they said, hey, it's not our fault that the employees didn't use it so much. It was available for their use. Irs says don't play games. Irs says don't play games with me. If you follow these rules, we'll let you make it a hundred percent tax deduction, but if you don't play games with me, if you follow these rules, we'll let you make it 100% tax deduction. But if you don't follow these rules, don't get cute with us. All right, I hope you enjoyed this. Thank you so much and until the next time.

Speaker 2:

That's it for today's episode. Be sure to check out the description below for some free tax reduction resources that Boris put together for you. If you're ready to work with a tax advisor on your tax planning, be sure to schedule your call by heading over to wwwtaxplanningcallcom. That's wwwtaxplanningcallcom. And be sure to subscribe to our podcast to be notified when the next strategy is released.