A single-member S-corp rents the owner's 3,200-square-foot home to the corporation for 14 days in 2026 at $1,800 per day — $25,200 for the year — deducts it as rent, and the owner reports $0 rental income. The sales pitch said "tax-free under the Augusta Rule" and cited a Masters Tournament rental. On review, the deduction is largely disallowed, the $1,800 rate is indefensible without a comparable, and the corporate minutes show the same "board meeting" agenda copied 14 times. Next door, a consultant rents the same home for six documented days — a two-day team offsite, a client workshop, and a video shoot — at $1,100 per day supported by three local venue comps and a dated photo log, for $6,600 total. The rent survives.
Section 280A(g) — the Augusta Rule, named because Augusta homeowners rent to Masters visitors — lets a homeowner rent a dwelling unit for 14 or fewer days in the year and exclude the rent from income. The business side may still deduct the rent under Section 162 if the rent is ordinary, necessary, and reasonable. The rule is narrow, fact-heavy, and heavily marketed in 2025–2026 — which is why it is also an IRS audit filter. This guide explains when the rule actually helps owner-operators, how to set and prove a fair rent, and the corporate and bookkeeping steps that keep the 14-day exclusion from becoming a 100% adjustment.
The Rule — Two Sides, Both Must Win
Owner side — Section 280A(g): If you rent your dwelling unit (residence, vacation home, or portion thereof) for 14 or fewer days during the tax year, you exclude the rental income from gross income and you do not deduct rental expenses (other than expenses that are deductible without regard to rental — e.g., qualified residence mortgage interest and real property taxes within their normal limits, if you itemize). Day 14 is tax-free; day 15 makes the entire rental taxable — 280A(g) exclusion vanishes and you report all 15 days of rent and may then deduct allocable rental expenses under the normal vacation-home rules.
Counting days:
- A "day" is a day the unit is rented at fair rental value — a day you use it personally or leave vacant does not count toward the 14. A day rented to the business at a bargain rent may be recharacterized as personal use, not a rental day — the exclusion then fails on the facts.
- The test is per dwelling unit, per taxpayer, per tax year — calendar year for individuals. You cannot rent 14 days from January 15 to January 15 to split years; it is January 1–December 31.
- Married filing jointly share the unit — 14 days total for the unit, not 14 per spouse. Separate ownership of separate residences can support separate 14-day periods, but the business purpose for each must be distinct.
Business side — Section 162: The business may deduct the rent only if it is an ordinary and necessary expense of carrying on the trade or business, and the amount is reasonable. A deductible rent on the corporation's return is not proved by the owner's exclusion on Schedule E; each return must independently satisfy its test. The IRS's adjustment pattern in 2024–2026 Augusta cases is consistent: it concedes 280A(g) was facially met but disallows the business deduction for lack of business purpose and lack of fair value, leaving the owner with $0 excluded (because 280A(g) still stood) but the corporation with a nondeductible distribution in substance — often recharacterized as a dividend or shareholder distribution, not rent at all.
Both sides must win for the strategy to net out. An excluded $0 that the business could not deduct is a zero-sum wash at best — and a recharacterized distribution that also triggers payroll or dividend character at worst.
Business Purpose — The Meeting That Earns the Rent
Rent for a business day in your home must be for a business use of the dwelling unit itself — not a label for salary replacement.
What counts:
- Offsite or on-site business meetings where the home is the location — board meeting, annual planning session, quarterly review, team training, or client-facing workshop. The agenda must be specific and the attendee list must show who was there and why.
- Film, photo, or content shoots where the home is the set — product photography, video production that uses the residence's interior/exterior.
- Business storage or pop-up use — seasonal overflow, sample staging, or equipment staging where the home's space is actually used for the business task that day.
What does not count:
- Paper meetings — a "board meeting" with no agenda change 14 times, no minutes beyond "discussed business," no attendee signatures, and no travel or catering consistent with the meeting. Examiners have called this "rent by calendar."
- Disguised compensation or distribution — a profitable S-corp that has not paid reasonable W-2 compensation but pays $25,200 of 14-day rent to the shareholder-owner will face reasonable-compensation and substance tests simultaneously.
- Renting a personal-use day that was personal — a holiday party where business discussion was incidental does not become a rental day because the company wrote a check. The use test precedes the payment test.
Documentation per rental day — the file the examiner asks for first:
- Dated agenda and minutes — what was discussed, decisions made, time started/ended, attendee names and roles, and the part of the home used (great room + kitchen, patio, office — specify)
- Attendee proof — signatures, calendar invites, travel receipts, catering or AV invoice tied to that date
- Photos — the room set up for the business purpose that day (staged for a shoot, tables for a workshop) — more persuasive than a generic exterior shot
- Board or owner resolution where required — authorizing the rental of the shareholder's residence for documented business purposes at fair value
A log that shows 14 Saturdays of "meeting" with no clients, no team, and no deliverable is the pattern the IRS's 2023–2024 Augusta guidance describes as abusive. A log that shows six weekdays with agendas, sign-ins, and a deliverable per day reads as rent.
Fair Rent — The Appraisal That Matters More Than the Exclusion
Section 162 requires reasonable rent — fair market value for comparable use on that day in that market. No statute lets you charge a premium because the exclusion is tax-free.
How to support the rate:
1. Comparable venue rentals on that date, not hotel rooms. The Augusta premium — a Masters-adjacent home commanding $2,000–$5,000 per night for one week — is not a comparable for a Columbus suburb on a Tuesday in February. For a business meeting, comparable rentals are: conference space, day-office suites, small-venue rentals, and short-term rental homes marketed for meetings or shoots in the same ZIP or micro-market, for the same use type. A home's nightly Airbnb rate for sleeping is not a comparable for a day-use business meeting unless the home is rented as a meeting venue — a bedroom count alone doesn't make the use comparable, and the venue market compensates for sleeping capacity you didn't use.
2. Property-specific adjustment. A venue comp must be adjusted for the subject's size, condition, location, parking, AV, and capacity relative to the comps. A 1,400-square-foot townhome does not command the same day rate as a 4,200-square-foot home with a suitable large room and parking — even before the Augusta premium idea enters.
3. Daily rate, not a fraction of annual rent. Annual rent ÷ 365 is not fair daily rental for occasional business use — the daily market for short, occasional day use is higher than a pro-rata annual figure, but not by a multiplier you invent. A $3,000-per-month home's annual pro-rata is $98 per day; a $1,800 meeting day is 18× that. The gap is bridgeable with comps, but not asserted without them.
4. One report per determination, refreshed. A single fair-rent memorandum dated January, citing three comps for meeting use in the market at $900–$1,300 per day, with adjustments of $200 for size and −$100 for AV, arriving at $1,100 for the subject, will support a $1,100 rate for the year. A $1,800 rate with no memo and no comps will not — and the excess is the adjustment. Most promoters' $1,800–$2,500 templates without market research overshoot the defensible range by 40–90%.
Reality check for 2026: in most U.S. suburban markets, a documented business-meeting day in a residence with a suitable 600–900 sq ft gathering area, parking for 8–12, and no commercial zoning premium supports $600–$1,400 per day for meeting use, not $2,400. Content-shoot days can support higher rates where the home's look has production value, but they require a production purpose, call sheet, and crew list — not a laptop on the kitchen island.
Entity, Payroll, and the 14-Day Tightrope
Ownership and who is the lessor: The owner is the lessor; the business is the lessee. If the home is jointly owned with a spouse, who receives the rent and who excludes it matters — the exclusion is to the person who rents the unit and receives the rent. If the home is held in an LLC or trust, the dwelling-unit test still turns on the taxpayer who owns and uses the unit and receives the rent — entity layering without business purpose complicates, not simplifies, the proof.
S-corps — reasonable compensation first, rent second. An S-corp must pay reasonable W-2 compensation before 14-day rent is a reasonable addition. A profitable S-corp paying a $35,000 W-2 plus $25,200 of rent will face a reasonable-compensation adjustment that dwarfs the rent issue. Excess or unreasonable rent to a shareholder is recharacterized as a distribution (or, for a C-corp, a dividend) — not deductible by the corporation and, critically, not excludable under 280A(g) in substance because the payment was not rent at all.
C-corps and double-tax: Unreasonable rent from a C-corp to a shareholder-owner fails the same test and is a dividend — deductible to no one.
Single-member LLC / sole proprietorship — no rent to yourself: You cannot deduct rent paid to yourself for using your own home for your own Schedule C business. The Augusta structure requires a separate entity as lessee (a corporation, partnership, or multi-member LLC taxed as a partnership/corp) or, where marketing suggests sole-prop "Augusta" with no entity, the transaction collapses — a payment from you to you is not rent and 280A(g) does not create a deduction you pay to yourself.
Tax-effect illustration — heavy vs. light use of the 14-day limit:
- 14 days × $1,800 = $25,200 — corporation saves ~ $6,300 of tax at 25% composite, owner excludes $25,200 from income, but the $1,800 rate needs three comps at $1,600–$2,000 per day. Without them, examiners typically cut to $900–$1,100 per day — more than half the deduction disappears.
- 6 days × $1,100 = $6,600 — corporation saves ~ $1,650, owner excludes $6,600, and the rate is inside the comp band. The deduction is smaller but defensible — the strategy's credibility in future years depends on winning the first exam, not on maximizing year one.
Day 15 trap: A 14-day filer who miscounts and rents a 15th day loses the entire exclusion — all 15 days become taxable rental income, though allocable expenses (insurance, utilities, depreciation pro-rata for the rental slice) become deductible under the vacation-home rules. A 14-day plan needs 14 or fewer rental days, tracked cumulatively from January 1, with a buffer — plan for 12–13, not 14, where a scheduling shift could push you to 15.
A Close That Fits Rental Season
In January — set the plan: Adopt a written 2026 14-Day Rental Plan — entity resolution authorizing rental of the shareholder/member's dwelling unit for documented business uses, the fair-rent memorandum with three local venue/meeting-use comps and adjustments, a 12–13-day cap (not 14), and a rental-day log template (date, use type, agenda link, attendees, photos, rate per memo). Without that memo, the rate is an assertion.
Each rental day — the five-minute closeout: Hold the business use, photograph the setup, save the agenda/minutes with signatures, link the catering or AV invoice, and post the rent that day at the memo rate — Business — Rent Expense / Cash on the corporate ledger and, for the owner, a 280A(g) note that income is excluded — not omitted — with the day counted on the rental-day log. Do not accrue 14 days of rent at year-end in a single entry dated December 31; daily use must be daily rent.
At filing:
- The business return deducts rent on the appropriate line supported by the memo, agenda package, and photo log — total rent equals the sum of the dated rental-day entries, not a round 14 × rate number booked in one journal.
- The owner excludes the gross rent from income under 280A(g) — report consistently (no 1099-MISC for the 14-day rent where the business is not required to issue one; if a 1099 is mistakenly issued, reconcile it on the return) and keep the rental-day count, memo, and meeting package with the workpapers. On the 15th rental day, the filing posture changes — the entire rental is taxable and allocable expenses are deducted under 280A(d)/280A(e) ordering and the Bolton method — a plan change the books should flag before day 15, not after.
The Bookkeeping Connection
The Augusta Rule rewards the habit that makes plain-text accounting powerful: every rental day is a dated, use-typed, vendored, and photographed event — not a December gross-up. When the fair-rent memo, rental-day log by date and use, agenda package, and daily rent entry live in the same version-controlled ledger, the story from "dwelling unit, 6 rental days × $1,100 venue-rate comp band, agendas and sign-ins attached, photos dated" to "$6,600 rent deducted at 162, $6,600 excluded at 280A(g), 8 days of 14-day capacity remaining" is traceable and explainable to a preparer who must sign both returns — and to an examiner who will ask for the agenda before the invoice.
Simplify Your Financial Management
The exclusion is 14 days; the deduction is every day's proof — miss the agenda and the fair rent and even a qualifying day becomes a distribution. Beancount.io gives you plain-text, version-controlled accounting where venue comps, rental-day logs, meeting agendas, and daily rent entries stay explicitly linked — no hidden December journal, no vendor lock-in, and AI-ready when you want help turning next week's offsite agenda into next April's clean exclusion. Get started for free and keep the 14 days you claim as the 14 days you can prove.