Some business owners that have downsized have plenty of open office or warehouse space. But they still have to pay the rent or maintenance if they own the building.
Strategy: Turn unused space into an athletic facility. This can be a prized tax-free benefit for the “keepers” still with the company.
If your business pays an employee’s membership fees to an outside athletic facility (like a health club), the payments are taxable as compensation. But the benefit of using an on-site facility is exempt from tax. So the deal is even sweeter for employees.
To qualify for this tax break, the following requirements must be met:
- The athletic facility is located on the premises owned or leased by the employer.
- The employer operates the facility through its own employees or by contract.
- Substantially all facility use during the calendar year is by employees, their spouses and their children.