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Corporate Rent

By March 2, 2020March 15th, 2020Blog, Profit First

Do you understand how the concept of corporate rent works?


Today we are taking a look at a beloved tax strategy that we have used for years, we call it Corporate Rent or the Augusta rule.


The rule was create in Augusta, Georgia, which is where they have the Masters golf tournament every year. During the time period of the tournament they get an influx of like 100,000+ extra bodies. Owners of homes down there realize there is some extra money that could be made if they rent out their houses.


It is called the “Augusta rule” because the income that they receive from that is not taxable income. This is because the tax rules say that if you own real estate and rent it out for less then 14 days in a calendar year you are not required to report any income from these rentals. Of course if you rent it a 15th day or above then the income has to be reported.


So how does this relate to your gym?


Well, you could be doing the same thing with your gym very simply.


What if we have your gym contract with you, as a person, to have a monthly board meeting at your house? That would equal 12 days in a year in which the business would be “renting” from you.


You can do a quick search on a home rental site to find out what the market rate is. Whatever the market rate, this is the amount you can charge to your business. This becomes a rent expense tax deduction on your business return that you are not required to report on your personal tax return.


Watch this quick video below to hear my take on this excellent little tax trick!


Check out our other videos for information on the Profit First system and other great tax tips for microgym owner.


In my new book, Profit First For Microgyms, I break down Mike Michalowicz’s proven method, so that it is easily digestible by our Microgym owner community.


You can order your copy today by clicking here. 


Interested in more tips and advice on how to better manage the financial health of your microgym? 


I would LOVE to connect.


I share daily tips and advice not only for Microgym owners but for all of us being bullied by the IRS.