Ever wonder how to make money on a charitable contribution? Read below!
Internal Revenue Code Section 280(A)(g) — says you can rent out your house for up to 14 days in a calendar year and all the income comes to you tax-free. Go beyond the 14 days, and everything becomes taxable.
One way is to:
- Rent out your house to a qualified charity or church for a meeting once a month. Call a local hotel and get their rates for a conference room to establish a fair rental amount. Say that’s $5,000 for the monthly use over the year. Since we have only 12 months, this monthly use will add up to less than 14 days out of the year, so all the rental income is tax-free.
- In appreciation for all the good works the charity or church does, you make a deductible contribution of $6,000. You’re in the 25% bracket, so that saves you $1,500 in federal taxes.
What’s the result? The charity spent $5,000 and got $6,000. It’s up $1,000. You contributed $6,000 and got $5,000 in tax-free cash, plus another $1,500 in tax savings. You’re up $500.