The Augusta rule is the nickname for IRC Section 280A(g), which lets a homeowner rent out a personal residence for 14 or fewer days in a year and exclude every dollar of that rental income from tax. The income is simply not reported, and in exchange no deductions are allowed against it. The name comes from homeowners in Augusta, Georgia, who rent their houses out at premium prices during the Masters golf tournament each spring and keep the money tax-free.
The rule applies to any dwelling the taxpayer uses as a residence: a primary home, and also a vacation home used enough days personally to count as a residence under Section 280A. The 14-day count is per dwelling per year, across all renters combined, and it is a cliff, not a phase-out. Rent the home for a 15th day and the exclusion disappears for the whole year, making all of the rental income taxable under the normal vacation home rules described in IRS Topic 415.
Using it with your own business
The rule becomes a small-business strategy when the renter is the owner's own S corporation or partnership. The company rents the owner's home for legitimate business use, board meetings, quarterly planning sessions, an annual team offsite, or client events, and pays a market rate for it. The business deducts the rent as an ordinary and necessary expense under Section 162. The owner receives the rent and, under Section 280A(g), pays no tax on it. Done properly across 12 to 14 days a year, that moves five figures out of the company at a zero percent rate, with no payroll tax, no distribution mechanics, and no effect on stock basis.
A sole proprietorship cannot use the strategy on itself: a Schedule C filer renting their own home is paying themselves, and Section 280A blocks the deduction. The play requires a separate taxpaying entity, which in practice means the S corporations most established creators already run.
The rent has to be real. Fourteen days at an invented $3,000 a day is the version that fails audits. In Sinopoli v. Commissioner (T.C. Memo. 2023-105), the Tax Court looked at S corporation owners deducting roughly $3,000 per meeting for gatherings in their homes and allowed only a few hundred dollars per meeting, the price of comparable meeting space in their area. The deduction survives at the price a stranger would actually pay for the space for a day, supported by quotes for comparable venues, hotel conference rooms, coworking event space, or peer-to-peer meeting rentals nearby.
What documentation survives an audit
The arrangement should look like a real landlord renting to a real tenant. That means a short written rental agreement between the owner and the company; a market-rate study kept in the file, refreshed when prices move, with screenshots or quotes for two or three comparable venues; a business purpose for each rental day, evidenced by a meeting agenda, attendee list, and minutes or notes; an invoice from the owner to the company for each use; and actual payment by check or transfer from the business account, not a journal entry.
The company reports the rent it paid where rent belongs on its return. If the business issues the owner a Form 1099 for the rent, the clean practice is to report the amount on the owner's Schedule E and back it out on the same schedule with a notation that the income is excluded under Section 280A(g), so the IRS document-matching computers find the number they expect.
Days rented under the Augusta rule should not double up with space the company is already paying for another way. Renting the same room the corporation reimburses monthly as a home office, for the same use, invites the argument that the rent is a disguised second deduction for the same thing.
For creators
Creator businesses generate plenty of genuinely home-based business events: quarterly content planning, brand campaign kickoffs, team shoot-planning days, year-end strategy sessions with an accountant or manager. Those are exactly the meetings the rule contemplates, and they are easy to document because they produce natural artifacts, content calendars, shot lists, campaign briefs, that double as evidence of business purpose.
The realistic economics are worth stating plainly. At a defensible market rate of, say, $500 to $1,200 a day depending on the city and the space, 12 to 14 days produces $6,000 to $16,000 of deductible expense for the company and tax-free income for the owner. For an owner in a combined 35% bracket, that is roughly $2,000 to $5,500 of annual tax saved for a few hours of paperwork. It is a real benefit, and it is also not a reason to fabricate meetings that never happened.
Mistakes that cost money
Crossing 14 days: the exclusion has no partial credit. Day 15 makes every rental dollar for the year taxable, and short-term rental platforms make it easy to drift past the line without noticing.
Pricing by wish instead of by market: rates reverse-engineered from a target deduction, like the $3,000 meetings in Sinopoli, get cut to the comparable-venue price and bring penalties and interest with them.
Skipping the paper trail: no agreement, no agendas, no invoices means the IRS treats the payments as what they look like, distributions or wages dressed up as rent.
Using it from a Schedule C: without a separate entity there is no deduction, only a homeowner moving money from one pocket to the other.
Ignoring state differences: a handful of states do not follow the federal exclusion dollar for dollar, so the state return deserves a check before the strategy is counted on.