1
Fewer than 15 rental days per dwelling unit per year. If the home is used as a residence and is rented fewer than 15 days, the rental income is excluded and no rental deductions are allowed. At 15 days or more, section 280A(g) does not apply: the rent is income and your deductions are governed by IRC 280A(c)-(e). Count every rental day. IRC 280A(g).
2
The home must be used as a residence. A dwelling unit is a residence if your personal use exceeds the greater of 14 days or 10% of the days it is rented at a fair rental. IRC 280A(d)(1). For a main home that you use all year this is met, but confirm it for a second home.
3
Fair rental value is the most scrutinized element. The business deducts only a reasonable amount. In Sinopoli v. Commissioner, T.C. Memo. 2023-105, an S corporation deducted about $290,900 of rent paid to its shareholders for meetings in their homes. The Tax Court found no appraisal or credible documentation and allowed $500 per substantiated meeting, the IRS agent's figure for local meeting space. Get written quotes from comparable venues for the same use before the event.
4
Legitimate business purpose and proof the event happened. The rent must be an ordinary and necessary business expense. IRC 162(a). Keep the agenda, attendee list, minutes and calendar entries for each day. Social gatherings with minimal business content do not qualify.
5
Document the arrangement and actually pay. Use a written rental agreement signed by both sides that states the dates, rate, space and purpose, and pay by check or wire from the business account. A written lease is good practice rather than a statutory requirement.
6
Separate taxpayers only. The payer and the owner must be different taxpayers, such as an S corporation, a C corporation or a partnership. A sole proprietorship or disregarded single-member LLC is treated as a branch or division of its owner, so there is no deductible payment to yourself and the calculator shows no saving. Treas. Reg. 301.7701-2(a).
7
State treatment varies - verify your state. IRC 280A(g) is a federal exclusion. Some states may not follow it. Check your state's rules before counting a state saving.
8
No rental deductions for you, and no Schedule E reporting. Under IRC 280A(g)(1) no deduction because of the rental use is allowed, and the income is not reported. Expenses allowable without regard to rental use, such as mortgage interest and real estate taxes, stay on Schedule A. IRS Publication 527 (Residential Rental Property), Used as a home but rented less than 15 days.
IRC 280A(g) (rental of a residence for fewer than 15 days: no rental deductions and income excluded); IRC 280A(d)(1) (use as a residence); IRC 162(a) (ordinary and necessary business expenses; reasonable amount); IRC 11(b) (21% corporate rate); IRC 199A(a) (20% qualified business income deduction; sunset removed by P.L. 119-21 sec. 70105); IRC 1(j)(2) (individual rates; permanent under P.L. 119-21 sec. 70101); Treas. Reg. 301.7701-2(a) (disregarded entities); Sinopoli v. Commissioner, T.C. Memo. 2023-105; IRS Publication 527.