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6th Avenue 2SW of, San Carlos St.
Carmel-By-The-Sea, CA 93921

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831-747-0310

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[email protected]

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What’s the Latest?

Week of April 8th-14th

Property Tips and Tricks

Real Estate Tips

Golf and Tax-Free Income?

Did you know you can rent your home out for up to 14 days per year and not pay taxes on the income?! Even if you're already hip to this, below we'll cover a few important considerations and use cases.

The Augusta Rule, known to the IRS as Section 280A, allows homeowners to rent out their home for up to 14 days per year without needing to report the rental income on their individual tax return.

This rule was originally created for residents of Augusta, Georgia who would rent out their homes to attendees of the annual Masters golf tournament.

So, do you have to live in Augusta to use it? No.

Do you have to be a golf fan to use it? No.

Since we have a few large events here on the Monterey Peninsula, the Augusta Rule could be worthwhile to exercise.

There are also many examples of homeowners who operate a business and rent their home out to their business for less than 15 days each year to qualify for the Augusta Rule. Not only do they receive tax-free income, but some claim the rental cost to reduce their taxable business income.

Heck, there's even the use case of a home remodel TV show using a variation of the Augusta Rule to avoid sticking homeowners with large tax bills for the improvement value. This fell under the guideline that tenant improvements are not taxable if you rent under 14 days per year.

While there are various use cases for the Augusta Rule, keep in mind that there is nuance involved, especially when renting to a business that you have ownership in. Just last year, the US Tax Court ruled against homeowners in Mississippi who used this rule to claim over $290,000 in rental expenses over a three-year span. "Pigs get fat, hogs get slaughtered."

If you're thinking about utilizing the Augusta rule, consult with a professional to see if it makes sense for your situation.

Real Estate News

Realtor in Carmel CA

Sticking Points

Among the garden-hose dose of news headlines this week is an important development that inflation ticked up, a not-so-good sign for those hoping for a rate cut soon. What does this mean for the housing market?

Well, mortgage rates rose, and as a result, mortgage demand is down.

Inventory continues to pick up across the country, although most of the country still has significantly fewer homes available for sale than pre-pandemic.

Despite the inventory remaining lower than historical averages, housing prices continue to hold strong. The question then arises - when will the housing market crash?

For such a crash to occur, one crucial factor must come into play - the supply of homes must surpass the demand. In reality, while it’s true that home prices have seen a decline of up to 20% in some areas (not here), it’s equally valid that prices have surged by a minimum of 20% in other regions. This fluctuation is a characteristic feature of averages, explaining why, on a national scale, housing prices remain robust.

Locally, inventory continues to tick up slightly, as expected this time of year. Certain price points are seeing more room for negotiation, while new or like-new properties are still selling very quickly.


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Jonathan Balog Luxury Realtor Carmel Pebble Beach

Jonathan Balog

DRE# 01980970
Broker
M: 831.747.0310
[email protected]

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Compass is a real estate broker licensed by the State of California operating under multiple entities. License Numbers 01991628, 1527235, 1527365, 1356742, 1443761, 1997075, 1935359, 1961027, 1842987, 1869607, 1866771, 1527205, 1079009, 1272467. All material is intended for informational purposes only and is compiled from sources deemed reliable but is subject to errors, omissions, changes in price, condition, sale, or withdrawal without notice. No statement is made as to the accuracy of any description or measurements (including square footage). This is not intended to solicit property already listed. No financial or legal advice provided. Equal Housing Opportunity. Photos may be virtually staged or digitally enhanced and may not reflect actual property conditions.

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Carmel and Pebble Beach Real Estate

JONATHAN BALOG

Broker Associate

831.747.0310

[email protected]

DRE 01980970

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This website is not the official website of Compass, Inc. Compass, Inc. does not make any representation, warranty, or endorse any information, including without limitation its accuracy or completeness, contained on this website. Compass is a real estate broker licensed by the State of California and abides by Equal Housing Opportunity laws. License Number 01527235. All material presented herein is intended for informational purposes only and is compiled from sources deemed reliable but has not been verified. Changes in price, condition, sale or withdrawal may be made without notice. No statement is made as to accuracy of any description. All measurements and square footage are approximate. If your property is currently listed for sale this is not a solicitation

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