Augusta Rule (Section 280A): Rent Your Home to Your Business

The Augusta Rule lets a homeowner rent out the home they live in for 14 days or fewer a year without paying tax on the rent. Business owners use it by having their S corporation, C corporation or partnership rent the home for genuine meetings: the company deducts the rent, and the owner receives it tax-free. It works only with a fair market rate, a real business purpose and solid paperwork.

The name comes from homeowners in Augusta, Georgia, who rent their houses to visitors during the Masters golf tournament each April and, thanks to Section 280A(g), keep that short-term rent free of federal income tax. The same rule applies to any homeowner anywhere in the United States. This guide covers who can use it, how to set a defensible rent, a worked example with numbers, how to paper the transaction with invoices, and the mistakes that get deductions cut. It is general information, not tax advice, so confirm the details with a CPA or enrolled agent before you rely on it.

How the Augusta Rule works under Section 280A(g)

Section 280A generally limits deductions for homes that are also used personally. Subsection (g) carves out a special case: if a dwelling unit is used by the taxpayer as a residence during the year and is actually rented for fewer than 15 days, the rental income is not included in gross income and no rental deductions are allowed. In plain terms, 14 days or fewer means the rent is invisible for income tax purposes.

The rule is all or nothing. On day 15 the exclusion disappears for the whole year, and you are back in the normal rental rules with income reporting, expense allocation and possibly the short-term rental passive loss rules covered in our guide to the short-term rental tax loophole. Professional firms such as Weaver and Adams and Reese summarize the same core test: a residence, a rental period that does not exceed 14 days, and a fair rate.

What counts as a dwelling unit

A house, apartment, condominium, mobile home or boat with basic living accommodations can qualify. It must be a place you use as a residence during the year, which includes a second home or vacation home you use personally, not only your main home. The 14-day count applies per dwelling unit, so owners with two homes sometimes ask whether each gets its own 14 days. That question has nuances, so raise it with your adviser rather than assuming it.

Who can use the Augusta Rule for business meetings?

The strategy creates a benefit only when the payer and the payee are different taxpayers. The business deducts rent, and you as an individual exclude it. That structure fits some entities and not others.

Business structure	Can it benefit?	Why
S corporation	Yes, the most common use	The S corp deducts rent, which lowers the profit passed through on your K-1; you exclude the rent personally
C corporation	Yes	The corporation deducts rent against corporate income; you exclude the rent
Multi-member LLC or partnership	Yes, with care	The partnership deducts rent; the paying partner's share of the deduction and the arrangement need clear documentation
Single-member LLC (disregarded) or sole proprietorship	No practical benefit	You cannot rent to yourself; use the home office deduction instead

If you are still choosing an entity, the Augusta Rule is a minor factor next to payroll and self-employment tax, so read S corp vs LLC before restructuring just to use it.

Setting a fair rental rate the IRS will accept

The owner's exclusion is rarely the problem. The business deduction is, because a deduction must be ordinary, necessary and reasonable in amount. A fair rate is what an unrelated business would pay for comparable space for the same event.

1. Define the space and use. Example: living room and dining room for an eight-person planning meeting, 9 a.m. to 4 p.m., with Wi-Fi, a screen and kitchen access.
2. Collect three comparable quotes. Hotel meeting rooms, conference centers, event venues or private coworking rooms in your area for the same headcount and hours. Save screenshots or emails with the date.
3. Adjust honestly. If the quotes include catering or AV that your home does not offer, strip those costs out. If your home lacks parking or accessibility, price below the venues, not above.
4. Use the same rate all year. A consistent day rate backed by the same comparables looks like a policy, not a number picked to hit a target.
5. Revisit annually. Refresh quotes each year so the rate reflects current local prices.

Avoid basing the rate on luxury wedding venues or on the nightly price of renting your entire house to vacationers. A business meeting for a handful of people in a living room is not the same product.

Worked example: S corporation owner holds quarterly meetings at home

The figures below are illustrative. Maria owns a marketing agency taxed as an S corporation. She holds a board meeting and a team strategy day each quarter at her home, eight events a year. Three nearby venues quote $1,150, $1,300 and $1,450 per day for a comparable private room, so she sets a policy rate of $1,300 per day.

Item	Amount
Days rented to the S corporation	8
Daily rate (median of three quotes)	$1,300
Total rent paid by the S corporation	$10,400
Reduction in S corp profit passed through to Maria	$10,400
Federal income tax saved at an assumed 24% marginal rate	$2,496
Rent included in Maria's gross income	$0 (excluded under 280A(g))

She has six days left under the 14-day ceiling and does not rent the house to anyone else. State tax treatment varies, so her preparer also checks whether her state follows the federal exclusion. The savings are real but modest; the strategy is worth it for Maria because her company genuinely needs the meetings and her home is a reasonable place to hold them.

Paperwork: invoices, agreements and meeting records

Treat the rental exactly as you would a payment to an outside venue. That means a short rental agreement, an invoice, a payment from the business bank account and evidence that the meeting took place.

• Rental agreement: parties, address, dates, rooms used, hours and daily rate. One master agreement with a schedule of dates works well.
• Invoice for each event: issue an invoice from you personally to the company showing the date, space, rate and total. A rent invoice template fits this neatly, and our free invoice generator can produce a numbered PDF in a minute.
• Payment: the company pays from its business account to your personal account, never in cash and never by mixing it into salary.
• Meeting evidence: agenda, attendee list, minutes or decisions, and photos if helpful. Board minutes for an S corporation are ideal.
• Fair rent file: the comparable quotes and how you chose the rate.

If the company pays $2,000 or more of rent to you in 2026, it will generally file Form 1099-MISC, since the reporting threshold for 1099-NEC and 1099-MISC rose to $2,000 for payments made in 2026; see our guide to the 1099 threshold in 2026. Keep the full packet with your other records as described in our invoice audit preparation checklist.

Common Augusta Rule mistakes

• Counting only business days. Days rented to anyone else, including vacation rental guests, count toward the 14-day limit.
• Family events labeled as meetings. A birthday party with a short business discussion is not a business meeting. Courts have reduced deductions where the business purpose was thin; in Sinopoli v. Commissioner, a 2023 Tax Court memorandum, the court disallowed most of an S corporation's claimed rent for meetings at the owners' homes because the rate and the meetings were poorly supported.
• Above-market rates. Pricing a living room like a ballroom invites an adjustment.
• Renting space already deducted as a home office. If you also claim a home office, do not rent that same space to the business on top of it. Keep the two arrangements clearly separate.
• Skipping reasonable salary. Augusta Rule rent is not a substitute for wages. S corporation owners who work in the business still need a reasonable salary.
• Using it for a sole proprietorship. Paying yourself creates no deduction when you and the business are the same taxpayer.

How the Augusta Rule fits with other owner strategies

The rule often sits alongside other ways of moving legitimate business costs out of your personal pocket. An accountable plan reimburses you tax-free for business expenses you pay personally, such as mileage or a portion of home office costs. Some owners also employ family members; see our guides to hiring your spouse and hiring your children. Each strategy has its own documentation, and stacking them only works when every piece stands on its own facts.

If you claim a home office on your personal return, the separate form and calculations are explained in our Form 8829 guide.

What to do if the IRS questions your Augusta Rule rent

If an examiner asks about the rent, provide the agreement, invoices, payment records, agendas and minutes, and the fair rent analysis. Most disputes end with an adjustment to the daily rate rather than full disallowance when the meetings are real. If records are missing, do not create backdated documents; work with a representative to reconstruct what happened from calendars, emails and attendee statements, and be prepared to accept a lower rate. Going forward, build the paperwork at the time of each event.

Is the Augusta Rule worth it for your business?

It suits owners of S corporations, C corporations or partnerships who genuinely meet at home a few times a year and are willing to document it properly. It is less attractive if the business has no real need for meetings, if your home is impractical for business use, or if you already rent your home short term and are near the 14-day limit. Run the numbers using your marginal rate and a realistic number of days, and compare the savings with the time and adviser cost.

When you do rent your home to your company, bill each event like any other vendor would. Create a clear rental invoice with dates, space and rate using our free invoice generator: no sign-up, and you can download it as a PDF for your records and your company's books.