Episode 36. Beach Home Tax Strategy

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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.

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7 Write-Offs Every S-Corporation Business Owner MUST Know
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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 ...

Episode Transcript

Speaker 1 (00:00):
If you are looking to buy that beach home and you're
thinking, can I write it off mytaxes as a business use, the
question that you should bereally asking is not can I write
it off, but how can I write itoff?
That is exactly what we'regoing to talk about.
Is that how can you write offyour personal beach house, condo

(00:23):
by the ocean, overlooking theocean, a ski cabin, whatever
that may be?
How can you write it off as abusiness expense and get a 100%
tax deduction?

Speaker 2 (00:34):
Welcome to the Tax Reduction Podcast for
money-making entrepreneurs withBoris Mushaev.
Boris has helped entrepreneursacross the United States
collectively save millions ofdollars in taxes with the power
of tax planning and advisory.
The only way you, the businessowner, can save money on taxes
is by using proactive taxstrategies, and this podcast is

(00:55):
all about saving you money ontaxes.
Boris will share with youin-depth and easy to understand
tax reduction strategies thatyou can implement in your
business within 30 days or less.
Let's jump into today's episode.

Speaker 1 (01:07):
All right, welcome back and let's talk about how
can you make your beach home atax deduction which is 100%.
Before we continue, we have tounderstand rules.
Now here's the thing.
Obviously, if you buy apersonal beach home, then it's a
personal expense.
It is not a tax deduction.
The question really becomes howdo we make it a tax deduction?

(01:29):
So, if you follow IRSguidelines and actually this
personal purchase that you had,if you convert it or designate
it as an entertainment facilityfor your employees because it is
now an entertainment facilityfor your employees it now
becomes 100% tax deductible.
But there are rules that youhave to follow.

(01:51):
These rules are simple and thatis what we're going to define.
All right, first of all, I wantto make sure that we understand
the terminology.
Now I feel like I'm a collegeprofessor here.
It's very, very important and Iwant to make a huge disclaimer.
You need a tax advisor thatyou're going to do this.
Now, this is for educationalpurposes only, so that you, the
profitable business owner, canknow wow, I can do this and how

(02:14):
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 andstrategize on a consistent basis
, then please do not implementthis strategy on your own.
All right, let's get theterminology in.
I'm going to refer to this.
This is my own terminology.
We're going to have executivesand we're going to have regular

(02:35):
employees.
We need to know the differencebetween both of these in order
to understand how to use thistax strategy.
So the IRS says look, if youwant to designate your beach
home as a entertainment facilityfor your employees, then your
regular employees have tobenefit from it more than your
execs.
All right, executives Now, whoare considered executives?

(02:57):
So, for the purposes of thisstrategy, irs says you are
considered an executive.
If number one, you are an owner.
Okay, again, these are not thepeople that cannot use it.
They just have to use it lessthan the regular employees, and
we're going to talk about theuse test and how that works in a
second.
So the owner is considered theexecutive.

(03:18):
All the immediate familymembers.
Actually, I'm not even sure ifgrandchildren considered
immediate.
I guess they are All right.
So it's basically your spouse,your children, grandchildren,
grandparents, whatever that is.
So they're consideredexecutives.
They may not work for you inthe business, they may have
nothing to do with you in yourbusiness, but because they're
related to you, they'reconsidered executives.

(03:38):
The second executives areanybody that owns 10% or more of
the business they are in thisbucket right here and we've got
looking down for my notes, let'ssee and also anybody that is
making $135,000 or more.
They are considered executive.
So we've got owners, family ofthe owner members, $135,000 and

(03:59):
plus salary, and more than 10%owners.
They are all executives.
Everybody else that's left overare regular employees.
So we've got that definition.
Now IRS says look, if you wantto designate this as an
entertainment facility, then theregular employees have to use
it more than the executives andthe rule has to be 51% of use

(04:20):
versus 49% of use.
So let's do a quick example.
We have 365 days in a year.
You're paying expenses for thisfacility for the entire 365
days.
Now your employees regularemployees use this facility for
50 days out of the year.
You, on the other hand, use itfor 40 days out of the year, so

(04:42):
altogether that's 90 days.
So IRS says your regularemployees use it more than the
executives.
All the expenses for the entire365 days becomes a tax
deduction.
Wow, what an amazing taxstrategy.
More to say about it.
And how can you reimburseyourself?
How can you structureeverything right after this
break?

Speaker 2 (05:02):
If you have a tax preparer and you do not have a
tax advisor, the only way youcan save money on taxes is by
using proactive tax planningstrategies that only a tax
advisor can give you.
Bora's put together a free PDFfor you, the business owner
Seven tax write-offs everyS-corporation business owner
must know.
In this PDF you can find seventax strategies that you can

(05:25):
start using in your business toinstantly start saving money on
taxes.
Click on the link in thedescription below for a free
download.

Speaker 1 (05:32):
Cool.
Welcome back after this break.
Now let's talk about how canyou structure this.
Click on the link in thedescription below for a free
download.
Buy it under your personal nameand then designate it as an

(05:58):
entertainment facility for youremployees.
Then, under the rules of theaccountable plan what is an
accountable plan?
You can reimburse yourself forthe use of this facility.
So we've got your business thatis making money, you've got
employees and a lot of greatthings are happening.
Then you've got this beach homethat you purchased.
You designate it as anentertainment facility for your

(06:19):
employees.
Beach home that you purchased.
You designated it as anentertainment facility for your
employees.
You meet the 51-49% rule andyou pay for all of these
expenses personally, so not fromthe business personally,
whatever it is property tax,mortgage insurance and whatever
that may be.
Okay, you're paying for all ofthat.
Now the business is going toreimburse you.
The owner, tax-free Business isgoing to get a deduction.

(06:40):
You do not pick it up as anincome.
You have this beautiful beachhome that you're writing off
your taxes Pretty, pretty cool,okay.
So make sure you follow theserules.
But again, I cannot stressenough how much you need a tax
advisor.
Don't do this on your own.
Don't do this with anaccountant that is incompetent,
doesn't know how to do this,never heard of this or tells you

(07:01):
it's a red flag.
Just tell them to look up theloss.
Now, the last thing I wanted totalk to you about here is proof
of use.
You've got to prove to the IRSthat you've used it.
What if there is an audit?
By the way, is this somethingthat's going to trigger an audit
?
No, an audit can be triggeredby many things, or can be a
random audit.
This is just a reimbursement toyou.

(07:23):
You might be asking, boris, howdo I report that reimbursement,
employee benefits right, itcould go on an employee benefit
section of your tax return.
Now, proof of use you have tokeep a log.
Make sure you keep a log thatemployees are signing in and
signing out, that they're usingthis facility and that remember
the executives versus regularemployees.
Regular employees should beusing it less than the executive

(07:46):
, and that is what your law isgoing to show.
Now there has been some courtcases around this and the IRS
said no, you've got to meet theuse test because there was a
court case.
I think I don't remember whichone exactly it was, but they
talked about.
The owner was deducting it, buthe was using it more right.
The executives were using itmore than the regular employees.
But they said, hey, it's notour fault that the employees

(08:08):
didn't use it so much.
It was available for their use.
Irs says don't play games.
Irs says don't play games withme.
If you follow these rules,we'll let you make it a hundred
percent tax deduction, but ifyou don't play games with me, if
you follow these rules, we'lllet you make it 100% tax
deduction.
But if you don't follow theserules, don't get cute with us.
All right, I hope you enjoyedthis.
Thank you so much and until thenext time.

Speaker 2 (08:25):
That's it for today's episode.
Be sure to check out thedescription below for some free
tax reduction resources thatBoris put together for you.
If you're ready to work with atax advisor on your tax planning
, be sure to schedule your callby heading over to
wwwtaxplanningcallcom.
That's wwwtaxplanningcallcom.
And be sure to subscribe to ourpodcast to be notified when the

(08:47):
next strategy is released.