Tax

The Augusta Rule (§280A(g)): Rent Your Home to Your Business

Up to 14 days/year of personal residence rental to your own business — tax-free to you, deductible to the business. Here's how to do it right and why the IRS scrutinizes it.

By Aparna Devalla, CPA3 min · 5 slidesUpdated June 15, 2026

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What the Augusta Rule Actually Is

Internal Revenue Code §280A(g) excludes rental income from your personal residence from taxable income — if rented for 14 days or fewer per year.
If your business pays you fair-market rent to use your home for a board meeting, retreat, training, or client event, the business deducts the rent and you receive it tax-free.
Named after Augusta, GA — residents historically rented homes during Masters week tax-free under this rule.
Applies to any business entity: S-corps, partnerships, sole proprietorships, C-corps.

The Three Requirements

1. The home must be your personal residence — primary or secondary. Not investment property.
2. Total rental days must not exceed 14 in the calendar year. Day 15 disqualifies the entire year (all rent becomes taxable, requires Schedule E).
3. The rent must be at fair market value — supported by comparable rates from hotel meeting rooms, event spaces, or commercial rentals in your area.

Defensible Documentation

Written rental agreement between owner (you personally) and business — signed and dated for each use.
Business purpose for each rental: board meeting agenda, retreat schedule, training outline, client event details.
Fair-market rent calculation: 3 comparable quotes from local hotels, event spaces, or commercial venues. Keep printed quotes.
Board resolution (S-corps and C-corps) authorizing the rental and rate.
Payment via business bank transfer — not cash, not personal check moves between joint accounts.

Common Audit Triggers

Round numbers ($1,000 × 14 days = $14,000) without comparable-rate documentation. Real rentals don't produce clean round totals.
Same-day meetings every single Monday — IRS sees this as a salary substitute, not legitimate event rental.
No business activity actually conducted (no meeting minutes, no attendees, no agenda).
Rent rates wildly above local market — auditors compare to commercial space rates.
Personal residence not actually used for the business activity (e.g., 'meeting' happened at the office).

When It's Worth It

S-corp owner with quarterly board meetings + annual retreat: 4–6 days/year of legitimate rental at $1,500/day = $6K–$9K of deductible rent that becomes tax-free income to you.
At a 32% marginal rate, that's $1,900–$2,900 of federal tax savings annually for documentation that takes one hour per event.
Best fit: S-corps and C-corps with annual events. Sole proprietors get less benefit (no entity to pay rent FROM).
Not worth it if you don't actually use your home for business activity, or if you can't document fair market rate.
Need help structuring this? Rubric Financial includes Augusta Rule documentation in tax-planning engagements.

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