Compromises don’t make great heroes, but they do make great democracies.

“Isn’t it appropriate that the month of the tax begins with April Fools’ Day and ends with cries of ‘May Day!’?” ~ Rob Knaverhase

“By the way, the tax code has 6,871 pages and over 1,000 forms to report every conceivable type of income and what you do with it.” – And that is no April Fool’s joke!

Something else that occurs in April is the annual golf pilgrimage to Augusta, Georgia, for the Masters Golf Tournament. What is little known is a real estate tax rule that is actually called “The Augusta Rule.”

The Augusta Rule is an IRS provision that allows homeowners to rent their home for up to 14 days each year without having to report the rental income received on their individual tax returns. The rule dates back to the 1970s when Augusta residents wanted to avoid tax complications from renting their homes during the Masters.

While widely used in Augusta, the tax exemption is available to anyone in the U.S. and can be particularly beneficial to homeowners in small cities hosting big events. Here are the details on how the exemption works:

  • The home you’re renting must be a residence, but doesn’t have to be your primary residence, which means vacation homes are also eligible for the exemption.
  • If you rent the home for more than 14 days, you’ll owe taxes on all of the rental income earned during the year.
  • There’s no income limit to the exemption.
  • The days the home is rented don’t have to be consecutive, so as long as the total days don’t exceed 14 for the year, the income is tax-exempt.
  • Business owners may be able to use the exemption to rent their home to their business for meetings, but be sure to keep detailed records for the IRS and charge a competitive rate based on the current market.

San Diego’s jobless rate was 4.5%, just above the U.S. average of 4.4%, but still lower than the California rate of 5.5%. These January numbers do not reflect the job cuts being implemented by the Trump administration. On the other hand, top employers by job postings in San Diego were Scripps Health, Apple, Starbucks, General Atomics and Qualcomm.

Again, remember my adage: you want to buy real estate where more people are moving in than moving out. Unfortunately, almost 24,000 residents left the San Diego region between 2023 and 2024 (and 30,000 left the year before that). Migration, however, exceeded 24,000, breaking us just about even (+300!). Most of this flux can be tied to the high cost of housing (out) and immigration (in).

For the first time ever, service-based uses look to account for more than half of retail leasing, and this trend looks to continue in 2025. I have also been preaching this for over two decades. The rise of the Big Box and e-commerce have long been an industry problem, but the growth of service spending and the fact that you can’t deliver the restaurant and bar experience (Uber Eats is not an experience). Also, unless you use a Flowbee to cut your hair, most of us go out to get our haircut or for a massage. As our aging demographic accelerates and the MAHA movement grows, the focus on health and wellness will continue to grow the demand for retail space for service uses. The retail location is becoming the destination for essential services and experiences, as the consumer seeks immersive, social, interactive, service-driven experiences. This offers potential for value investors to repurpose smaller, mismanaged properties. Even office is ripe for creative opportunities: conversion to creative opportunities, reposition as value-add office, conversion to residential (tough) or demolition for residential rebuild (been there, doing that).

Nick’s Numbers

Banks are reluctant to take losses despite commercial property loans hitting 10-year high delinquencies. Borrowers should start early on refinancing maturing loans. Private lenders are stepping in to fill some financing gaps. Borrowers should consider shorter-term loans with no prepayment penalties to allow for refinancing when rates hopefully stabilize and come down. Current rates are in the 6.5% to 7% range (a little less for owner-occupied).

If you would like an analysis of your properties’ value or discuss what you should be doing with regard to interest rates or inflation and their impacts on your business, tenants, or property, I’d be happy to talk. (Nick Zech, 858-232-2100, nzech@cdccommerical.com).

ALERT! Water rates are about to soar. The San Diego City Council voted to approve a 5.5% increase. But that is just the beginning. Projections are for a 60% increase through 2029. Believe me, there are a lot of stupid reasons for this, but suffice it to say, you’ll be paying for it while it is debated for years to come!

Well, I hope this month you are not fooled by the taxman and you enjoy watching The Masters. Hope you enjoy the story…


Augusta National Golf Club was founded by Bobby Jones, one of the greatest golfers of all time, and Clifford Roberts in 1933.

The Eisenhower Tree

Bobby Jones wanted an elegant retreat for his friends where they could enjoy each other and golf. He and Roberts created a tone and atmosphere that remain to this day.

My favorite Augusta National story is about the Eisenhower tree. This was a huge loblolly pine that stood right in the middle of the 17th fairway.

President Eisenhower, an ardent member of Augusta, visited 45 times (5 before he become president, 29 while he was president, and 11 times after he retired from the presidency).

Eisenhower was an enthusiastic golfer, and this tree was driving him crazy – because he kept hitting it. Finally, in 1956, Eisenhower went to the Board of Governors meetings as a member and made a motion to cut the tree down. Cliff Roberts, president of the club, ruled him out of order, Ike, of course, accepted the ruling as a mere member.

Imagine the moment.

Here was a retired five-star general, former commander of the Allied Forces in Europe, who was at the time the extraordinarily popular president of the United States — and he was ruled out of order.

No one could dictate. Everyone had to abide by the rules. This is the spirit of Augusta National and the spirit of the great championship that occurs there every spring.

Sadly, in February 2014, the Eisenhower Tree was removed after suffering extensive damage during a major ice storm. “The loss of the Eisenhower Tree is difficult news to accept,” August National Chairman Billy Payne said. “We obtained opinions from the best arborists available and were advised that no recovery was possible.” The storm occurred two months before the Masters Tournament. A remnant of the tree was donated to the Eisenhower Presidential library in Abilene, Kansas and is on display.

There is another tree named after Eisenhower, located at Dalmany Golf Club in Scotland, planted by the President during a visit to Edinburgh to receive the freedom of the city in 1946. On hearing of the death in Augusta, the club offered to provide an acorn to plant a new oak tree a few yards beyond the stricken Eisenhower tree. Unfortunately, that tree too was removed due to an ice storm.

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