The Augusta Rule (Section 280A): Rent Your Home to Your Business Tax-Free

What Is the Augusta Rule?

The Augusta Rule — named after the city of Augusta, Georgia, where homeowners rent out property during the Masters Tournament — is codified in IRC Section 280A(g). It provides a narrow but powerful exception: if you rent a dwelling unit to someone else for 14 days or fewer during the tax year, the rental income is excluded from your gross income. You don't report it, you don't pay income tax on it, and you don't deduct the expenses attributable to those days — but the rental itself is still a real, deductible transaction for the business that pays it.

The key insight for business owners: if your own business (an S-Corp, LLC, or partnership that is a separate taxpayer) rents your home for legitimate business use — a board meeting, a strategy retreat, a planning session — the business deducts the rent as an ordinary and necessary business expense, and you receive the income tax-free.

Who Qualifies?

• You own or rent a home (a dwelling unit you use personally for more than 14 days or 10% of rental days).
• You operate a separate business entity — an S-Corporation, partnership, or multi-member LLC that files its own return. (A single-member disregarded LLC taxed as a sole proprietorship on Schedule C generally cannot deduct rent paid to itself.)
• The use is bona fide business use: a board meeting, shareholder meeting, strategic planning session, or employee retreat with a real business purpose and contemporaneous documentation.
• You keep the rental at or under 14 days for the entire tax year.

How It Works — A Worked Example

At a 24% federal marginal rate plus state tax, that's roughly $900–$1,200 in combined tax savings on a single, well-documented transaction — and you can do it every year, up to 14 days.

How to Document It Correctly

The Augusta Rule is legitimate, but it is not a free-for-all. The IRS looks for substance. To withstand scrutiny:

• Establish a fair-market rental rate — comparable to what you'd pay for meeting space or a short-term rental of a similar property in your area. Don't overcharge.
• Use a written rental agreement between you (personally) and your business, even if simple, stating the daily rate and permitted use.
• Keep a contemporaneous business record: meeting agenda, attendees, minutes, and photos of the space in use.
• Pay through the business — an actual transfer (check, ACH) from the business account to you personally — not a bookkeeping entry only.
• Track the 14-day cap across the full year. Going over by even one day converts the rental into a taxable Schedule E activity with allocated expenses.

Is It Right for You?

If you own an S-Corp or partnership and you host real business meetings at your home, the Augusta Rule is one of the cleanest, lowest-risk strategies in the tax code. The savings are modest per day but reliable, and the documentation is straightforward. For owners with higher profits and higher marginal rates, the math only gets better.