Is That Deductible? It Depends: "Friends In The Legacy House"

The Legacy House

A few years ago, we moved an old historic house to Main Street in our charming little town. It is situated in such a picturesque place, along a tree-lined road, on a lovely corner lot. We absolutely love it. However, with five older children, a single-car garage, and no parking available along the city street, parking became a bit of an issue.

When the neighbor directly behind us told me they were moving, I saw the opportunity to acquire some parking spots. I advised him against listing it on the market, assuring him that I would pay him the Zillow price for it. He agreed, and $83,000 later, I owned another house that was actually older than mine. The property also included an old carriage house.

My wife and I made the decision to completely remodel our home and transform it into a guest house. We also designed the first-floor suite to be handicap accessible, so it could be converted into a "granny house" if needed. We also designed a three-car garage as a reimagined version of the carriage house. We have a deep appreciation for history and it was truly special to preserve both historic homes.

The home now boasts three complete suites with connected bathrooms, and we were inspired to name it the "Legacy House" in honor of our parents—we created wall plaques with pictures that shared their "stories," which we placed right in the entryway. We are immensely grateful for the loving influence of our parents and we absolutely love introducing these cherished relationships to others in this special way.

Ultimately, we decided not to make it into a true STR. Instead, we decided that it should be used for family, friends, medical students, missionaries, and others with special needs. It has been absolutely wonderful sharing this space with so many individuals, ranging from neighbors who were displaced by a flood, to transitional housing for a new pastor, as well as for multiple medical students who participated in a one-month immersive rural medicine rotation with me. Additionally, missionaries, speakers, entertainers, and many extended family members have also been accommodated, just to name a few.

Two of my micro-businesses also rent office space annually at the same location. This arrangement helps cover various maintenance and property expenses at the dwelling, and it creates opportunities for shared outdoor expenses at both properties. For example, we have a groundskeeper who takes care of both locations, as well as snow removal services.

Paul & Sara

I met Paul and Sara almost 25 years ago when they relocated to our community from Indianapolis. Their mission was to start a church, with Paul leading the way and Sara utilizing her teaching degree. I had the pleasure of meeting both of them in my clinic when they scheduled appointments to establish their care after arriving here. I thoroughly enjoy listening to patients' stories about how they ended up in our little town, and I was also curious to learn about the ways in which God was working in their lives.

Not long after meeting them, my wife and I were inspired to bring a marriage ministry to our region. We hoped that this ministry would help reduce the current divorce rate, which stands at 50%+. I grew up in a divorced home and witnessed the pain that comes with it. This personal experience instilled in me a strong determination to never go through a divorce myself and to work tirelessly to help others avoid the hardships that come with it. One of the aspects that attracted me to Family Medicine is the ability to be connected to all members of a family in a holistic way which affords me the opportunity to positively influence their lives.

As it turns out, Ellen and I invited Paul and Sara to our home to pray for the families of our community. After a few hours of intense prayer together, we felt inspired and realized that we were meant to work together in some way to bring hope to marriages.

Family Foundations

One thing led to another, and before we knew it, Paul took on a leading role in the regional marriage ministry that we created together called Family Foundations. I served as the board president and, as a result, took on the responsibility of both writing and applying for our 501(c)(3) non-profit approval from the IRS. To my amazement, after a short amount of time, it was approved. That was truly a remarkable life experience and achievement, in retrospect.

Paul, with his exceptional leadership, directed the ministry and made a truly life-changing impact on many in our region. As the organization continued to grow and evolve, it eventually adopted the name Marriage Mentors. From pre-marriage counseling to intervening in crisis marriages to helping couples get off the path to divorce, we have trained an army of mentors (couples) who have come alongside many in our community. Our mission was to harness the power of ordinary, everyday marriages to support couples, rather than relying solely on Paul to do all the work himself. The model worked marvelously, allowing us to expand our work to adjacent counties and eventually export it to several European countries. Wow! When we humbly started this, I would have never expected such a broad and influential reach. It has proven to be a wonderful focus for charitable giving in our home, in addition to our personal involvement in mentoring many couples ourselves over the years. Ellen and I treasure those special relationships and particularly cherish the marriages that were saved from the brink of divorce. We have learned how to flourish and truly enjoy marriage.

It also fostered a deep relationship and friendship with Paul and Sara, who, despite not having children of their own, enriched the lives of our five children with their love, care, and mentoring over the years!

However, the time has come for Paul to retire from the ministry at the age of 70. With that decision, we all agreed that it was also the right time to transfer the ministry into the hands of a larger organization that can utilize all the assets associated with our lifelong work. Life Action Ministries has accepted and acquired our intellectual assets, and we have contributed our monetary assets to the ministry in Europe.

II should add that during these years, Sara was not only a very successful elementary teacher, but she also inspired a mentoring program in her school called Kids Hope USA. This program specifically focuses on providing support and guidance to disadvantaged kids. Sara used her influence in the classroom but in the school in general to make a big difference in a generation of children. Well done Sara!

Time to Move

As Paul and Sara concluded their careers here, they felt inspired to explore the possibilities of returning to the Indianapolis area, where they have strong connections with many friends. It turns out their house sold quickly, and they were able to find a great new place in a charming rural area south of Indianapolis. There was a small problem: the time between needing to vacate their old home and being able to move into their new place was going to be a couple of months.

Enter the Legacy House.

As we prayed with and for Paul and Sara, we knew that our guest house would be the perfect place for them to land during this transition.

So, we moved my daughter, Hannah, out of the house since she had been using it as her quiet remote classroom for her online creative writing degree with Liberty University.

Another daughter, Sara, helped with some general cleaning for which we paid her less than $100.

We then hired a professional cleaner to come in and give it a deep clean before Paul and Sara arrived. They'll be coming today.

Of course, we did some general touch-ups and I finally took care of a few items that I had been putting off for a while. Now, everything is all set for them to join us in a few weeks.

Now for the fun part, figuring out what is deductible.

Is That Deductible? It Depends

Legacy HouseTaxes, Insurance, Internet, Utilities and Property Maintenance—The business expenses for the house, which is an LLC in our business enterprise, are offset by the rental income from my two micro-businesses.

Family Foundations/Marriage Mentors—We engaged in uncompensated community service, but the annual contributions to support the ministry were considered charitable donations for our personal taxes, thanks to the 501c3 designation.

Hannah’s Remote Learning—There are no deductible expenses involved, just a nice and convenient quiet place for her to pursue her college studies from home and feel like she is "away". However, our 529 plan is being utilized to fund her educational expenses, and there are several tax advantages associated with it.

Sara’s House Cleaning-Since the amount was under $600, it was not necessary to report it to the IRS. However, she has performed cleaning services on other occasions this year therefor we will consult with our accountant to determine if tax reporting will be required for her income. The cleaning expenses are a business expense to our LLC.

Contractor House Cleaning-This expense is deductible for our LLC and is covered by rental income.

Paul & Sara Using The Legacy House-This is not a deductible business expense. Instead, it is a simple gesture of being a good community steward, open-handedly sharing our resources with those in need.

I truly hope that today's post has inspired you and sparked some ideas on how to maximize the interplay between your personal life and micro-business.

If you are early in your career, I want to extend a warm invitation to join our live virtual webinar on September 29th at 8:30 EST, titled "Are You Ready To Take Control of Your Future?". It's a fantastic opportunity to gain valuable insights and guidance. Register now by clicking here.

I am excited to extend an invitation to you to take a step towards becoming a member of our thriving community here.

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