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Pile on tax-free income for home rentals

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in Small Business Tax

It's not very often that the IRS lets you pull down tax-free income. So, take advantage of such opportunities when they pop up.

Case in point: Suppose you live close to a football stadium, golf course or other venue that hosts major sporting events. You don't want to deal with the traffic and hassle when the event takes place. In fact, you plan on going elsewhere.

Strategy: Rent out your home while you're away. Under a narrow exception in the tax rules for residential rentals, you don't have to report any of the rental income as long as the number of rental days for the year is 14 or fewer. In other words, all of the income from such short-term rentals is 100 percent tax-free!

Of course, you can't take any deductions to offset the rental income, but so what? If the PGA is playing on a nearby course, you can pocket hundreds or thousands tax-free with no strings attached.

Final tip: If you stay at home and charge cars $20 a pop to park on your property, the net income you receive from your parking-lot "business" is fully taxable.

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