Your business needs somewhere to hold its annual planning retreat, its quarterly board meetings, and the occasional all-day strategy session. A hotel boardroom across town would charge $1,500 a day and your company would deduct every dollar without a second thought. But what if those meetings happened at your dining table instead — and the rent your business paid landed in your pocket completely free of income tax, while the business still took the deduction?
That is exactly what Section 280A(g) of the tax code allows, and it is nicknamed the Augusta Rule after the Georgia town where it all started. Get the mechanics right and it is one of the few genuine win-wins in the tax code: a business deduction on one return and tax-free income on the other. Get them wrong and you have manufactured an audit adjustment with your own invoices. This guide walks through how the rule works, who qualifies, how to price the rent, and the paper trail that keeps the whole thing standing.
What the Augusta Rule Actually Says
Section 280A(g) is short and surprisingly plain. If you rent out a dwelling unit that you use as a residence for 14 days or fewer during the tax year, you exclude the rental income from your gross income — and you claim no deductions attributable to that rental. The IRS explains the mechanics in Publication 527, the residential rental property guide.
The nickname comes from Augusta, Georgia, home of the Masters golf tournament. In the 1970s, local homeowners who rented their houses to tournament visitors for one lucrative week a year lobbied for relief from reporting that short burst of rental income, and Congress obliged with the 14-day exclusion. The provision applies nationwide today, to any homeowner, whether the renter is a golf fan, a vacation guest — or your own company.
Two features of the rule matter more than most summaries admit. First, the 14-day limit is a cliff, not a phaseout: rent for 14 days or fewer and all of it is excluded; rent for 15 days and all of it is reportable, not just day 15 onward. Second, the exclusion comes paired with a ban on deductions, so you cannot double-dip by excluding the income and then writing off a share of mortgage interest or utilities against it.
How Business Owners Use It: The Double Benefit
Here is the strategy in its simplest form. Your company holds legitimate business events at your home — board meetings, annual planning sessions, team retreats, training days, video or photo shoots. The company pays you fair market rent for each day, deducts those payments as ordinary and necessary business expenses, and you exclude everything you receive under Section 280A(g) because the rental lasted 14 days or fewer.
Run the numbers and the appeal is obvious. Suppose your company rents your home for 12 meeting days in a year at a documented fair market rate of $1,500 per day. The company deducts $18,000 of rent. If the business income would otherwise have been taxed at a combined 30 percent federal and state rate, that deduction is worth about $5,400 in tax savings — while you pocket the full $18,000 with zero income tax on it. Compare that with paying yourself an $18,000 bonus, which would arrive with income tax (and possibly payroll tax) taken out of both ends.
That comparison is also what makes the IRS skeptical of sloppy Augusta Rule claims. The tax benefit is real, but it belongs only to arrangements that look, document, and price like genuine rentals. Everything below is about clearing that bar.
Which Entities Qualify — and Which Don't
This is the first place business owners go wrong: the Augusta Rule strategy requires your business to be a taxpayer separate from you. It works when the renter is an S corporation, a C corporation, a partnership, or a multi-member LLC taxed as a partnership. In each of those cases the business claims the rent deduction on its own return while you exclude the income on yours.
It does not work for sole proprietors, single-member LLCs taxed as disregarded entities, or anyone else deducting business expenses on Schedule C. You cannot meaningfully rent property to yourself — the income and the deduction would land on the same return and net to nothing, and the IRS does not recognize a rental between you and your disregarded entity in the first place. If you operate as a sole proprietor and want to use this strategy, the conversation starts with entity choice, not with a rental agreement.
| Your business structure | Can it rent your home under the Augusta Rule? |
|---|---|
| S corporation | Yes |
| C corporation | Yes |
| Partnership / multi-member LLC taxed as a partnership | Yes |
| Sole proprietorship / Schedule C filer | No |
| Single-member LLC taxed as a disregarded entity | No |
One more boundary: the property must be a residence you own in the United States — a primary home, a vacation home, or a second residence all qualify. You cannot use the rule on property you rent from someone else, and you cannot use it on a property that is purely a rental with no personal use as a residence.
The Five Requirements, in Plain English
Every valid Augusta Rule rental satisfies the same five conditions. Miss any one of them and either the exclusion or the deduction fails.
1. You own the property. The homeowner claiming the exclusion must be the owner. If your spouse solely owns the home, the rental economics and the exclusion follow the owner, so get the paperwork names right.
2. It is your residence. The dwelling must be a place you use as a residence during the year. This is normally the easiest test for a primary home and the one most often questioned for a property you rarely visit.
3. Total rental days are 14 or fewer — counting every renter. This is the trap. The 14-day limit covers all rental use of the dwelling during the year, not just the days your business rents it. If you list the same home on a vacation-rental platform for 10 nights and your company rents it for 6 meeting days, you are at 16 rental days and the exclusion is gone for the entire year. Track every rental day from every source in one count.
4. The rent is fair market value. Your business must pay what an unrelated party would pay for comparable space. This requirement gets its own section below because inflated rent is the single most common reason Augusta Rule deductions get disallowed.
5. The business use is legitimate. Each rental day needs a genuine business purpose — a meeting with an agenda, a retreat with a program, a shoot with a call sheet. The expense must be ordinary and necessary to the business, the same standard as any other deduction. A "meeting" with no attendees, no agenda, and no work product is a gift to yourself with extra steps.
How to Set a Fair Market Rent That Survives Scrutiny
Nothing about the Augusta Rule draws IRS attention faster than a daily rate untethered from reality. A three-bedroom suburban home does not command $5,000 a day just because the invoice says so. The standard is what comparable venues in your area charge for comparable use, and the burden of proving it is yours.
Build your rate the way an appraiser would. Collect written quotes from at least three comparable local venues — hotel boardrooms, conference centers, coworking event spaces, retreat facilities — for a full-day rental serving a similar headcount. Print or save the quotes with dates; screenshots of rate pages with the URL and date visible work fine. Adjust honestly for genuine differences: a private home with a pool, acreage, a chef's kitchen, and overnight rooms can legitimately exceed a windowless hotel meeting room, but the premium needs a reason you can articulate, not just a number you prefer.
Keep the rate consistent across the year unless something actually changed. Charging your business $800 a day in March and $2,500 a day in December for the same room and the same kind of meeting invites exactly the question you cannot answer. And resist round-number theatrics: a rate of $1,475 supported by three venue quotes beats a round $2,000 supported by nothing.
Finally, remember that state and local short-term rental rules may apply to your arrangement regardless of the federal tax treatment. Some cities require registration or permits for short-term rentals, and those obligations do not disappear because the renter is your own company. Check local rules before your first rental day.
The Paper Trail: Document Every Rental Day
In an examination, the auditor's question is never "does Section 280A(g) exist" — it is "prove a real rental happened on each of these days, at this rate, for this business reason." Winners answer with a file folder. Build yours contemporaneously, not the week the audit letter arrives.
For each rental day, keep:
- A written rental agreement between you and the business, signed before or at the start of the rental period, stating the property, the dates, the daily rate, and the payment terms.
- A meeting agenda showing what business the day covered, with times and topics.
- Minutes or notes recording what was actually decided or produced.
- An attendee list with names and roles — who was there and why they needed to be.
- An invoice from you to the business for the rental day, matching the agreement's rate.
- Proof of payment — a cleared business check or bank transfer, not cash, not a journal entry with no money movement.
- A matching bookkeeping entry on the business side recording rent expense, with the invoice attached.
- A running log of rental days for the dwelling across all renters, so you can prove the 14-day count at year end.
- Supporting evidence such as photos of the setup, presentation decks, or shoot files.
On the reporting side, if the business pays you $600 or more in rent for the year, it generally must issue you a Form 1099-MISC reporting the payments as rents. Many practitioners then report the 1099 amount on Schedule E and back it out on the same schedule with a notation referencing the Section 280A(g) exclusion, so the return reconciles to the information return the IRS already received. Your CPA may handle it differently, but "the business never issued the 1099 and the income appears nowhere" is the version that generates matching notices and uncomfortable questions.
Seven Mistakes That Blow Up the Strategy
Going past 14 days. The cliff is absolute. Day 15 makes the entire year's rental income reportable and drags the dwelling into the full vacation-home allocation rules. The most painful version: owners who carefully count 12 business rental days and forget the 5 nights the same house spent on a vacation platform.
Counting only business days. Related to the above — the limit is total rental days from all sources. One dwelling, one count, one log.
Charging above-market rent. The IRS can recharacterize excess rent as a nondeductible distribution or disallow the deduction outright. If your comparables support $1,200 a day, invoice $1,200 a day.
Renting without a business purpose. Personal dinners relabeled as board meetings, "strategy sessions" nobody attended, rentals on days the business had no activity — these fail the ordinary-and-necessary standard and take the deduction down with them.
Moving no money. A journal entry debiting rent expense and crediting a shareholder loan, with no actual payment, looks like what it is. Pay the invoice from the business account to your personal account and keep the transfer record.
Claiming rental deductions on the personal side. The exclusion forbids it. Do not allocate mortgage interest, insurance, or utilities against excluded rent. (Mortgage interest and property tax remain deductible on Schedule A to the extent the law otherwise allows — just not as rental expenses.)
Treating it as casual because the amounts feel small. A $9,000 exclusion with no agreement, no agenda, and no comps is harder to defend than a $20,000 exclusion with a complete file. Documentation quality, not dollar size, decides these cases.
Keep Your Rental-Day Records Audit-Ready
Notice how much of this strategy is really a recordkeeping discipline: a day-count log that never drifts, invoices that match agreements, payments that match invoices, and venue quotes filed where you can find them in three years. That is bookkeeping doing what bookkeeping is for — turning a pile of events into an account you can prove.
A plain-text ledger is a natural fit for this kind of evidence. Each rental day becomes a dated, human-readable transaction with the invoice and attendee list attached by reference, and the full history lives in version control where nothing can be quietly rewritten after the fact. If you want to see what that looks like in practice, the documentation walks through recording everyday business transactions the same way.
Keep Your Tax Strategy Organized from Day One
The Augusta Rule rewards business owners who treat their home rentals with the same seriousness as any other company expense — written agreements, market-rate pricing, and a complete paper trail. Beancount.io provides plain-text accounting that gives you complete transparency and control over your financial data, so every rental day, invoice, and payment is recorded in books you can actually defend. Get started for free and keep your next tax strategy organized from the first entry.
