The Augusta Rule, Section 280A(g) of the tax code, lets you rent out your home for 14 days or fewer per year and not report the rental income. Business owners sometimes use it by renting their home to their own company for legitimate meetings. The business deducts the rent and the owner receives it tax-free, but only if the rent is fair, the business purpose is real, and everything is documented.
This content is not tax or financial advice for you. Please talk with a CPA to find what's right for your situation.
Where the name comes from
The rule got its nickname from Augusta, Georgia, home of the Masters golf tournament. Homeowners there rent their houses to visitors for the tournament week each year. Congress made those short rentals tax-free, and the nickname stuck.
How the rule works
- Rent your home (a dwelling you use as a residence) for 14 days or fewer in the calendar year.
- The rental income is excluded from your income. You don't report it.
- Because it's excluded, you also don't deduct rental expenses for those days.
- Rent it for 15 days or more, and the exclusion disappears. All the rent becomes reportable under the normal rules.
The 14 days don't have to be in a row, and they're counted from January 1 to December 31.
How business owners use it
If you own an S corporation, C corporation, or partnership, your business can rent your home for real business events, such as:
- Board or shareholder meetings
- Quarterly planning sessions
- Team trainings or retreats
- Client events
The business may deduct the rent as an ordinary and necessary expense. You receive the rent tax-free under the Augusta Rule.
Sole proprietors generally get little or no benefit, because paying rent to yourself from a Schedule C business doesn't create a separate deduction and income.
The rules that make or break it
| Requirement | What it means in practice |
|---|---|
| Fair market rent | Get written quotes from local event spaces or hotel meeting rooms for comparable space and size |
| Real business purpose | The meeting must be a genuine business activity, not a family dinner |
| Documentation | Agendas, attendee lists, minutes, and photos for each meeting |
| Proper payment | A written rental agreement or invoice, paid from the business account to you |
| 14-day limit | Track every rental day, including any non-business rentals of your home |
Common audit traps
The IRS has challenged Augusta Rule deductions, and courts have sided with the IRS when:
- The rent charged was far higher than comparable spaces
- There was little or no proof the meetings happened
- The "meetings" were really personal or family gatherings
- The home was used for more than 14 rental days in the year
In those cases, the business deduction can be disallowed, even though the owner already excluded the income.
A simple example
An S corporation owner holds six quarterly and planning meetings at home during the year. Local meeting spaces of similar size rent for about $1,000 per day. The company pays $6,000 in rent, deducts it, and the owner excludes the $6,000 from income. At a combined 30% rate, that's about $1,800 in tax savings, assuming the documentation is solid.
Frequently asked questions
Can I use the Augusta Rule if I rent my home on Airbnb too?
Does it work for a vacation home?
Is the Augusta Rule legal?
See what your property may qualify for
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Read guideThis content is not tax or financial advice for you. Please talk with a CPA to find what's right for your situation.