Augusta Rule (Section 280A(g))
Authority: IRC §280A(g)
The Augusta rule lets a homeowner rent out their personal residence for 14 or fewer days per year and exclude the rental income from tax entirely: the income is not reported, and no deductions are taken against it. Named for homeowners renting houses during the Masters golf tournament in Augusta, Georgia, the rule becomes a small-business strategy when an owner's S corporation or partnership rents the owner's home for legitimate business use, such as board meetings, planning retreats, or company events. The business deducts the rent; the owner receives it tax-free. To survive an audit the arrangement needs real substance: a market-rate rent supported by comparable venue quotes, actual meetings with agendas and minutes, invoices, and payment by check or transfer. Exceeding 14 rental days for the year forfeits the exclusion for all of it.
Example
An S corporation holds monthly strategy meetings at the owner's home, 12 days per year, at a documented market rate of $1,000 per day. The business deducts $12,000, and the owner receives the $12,000 with zero federal income tax.
Related terms
S Corporation
An S corporation is a corporation or an LLC that elects corporate treatment that has filed a valid election under...
Accountable Plan
An accountable plan is a formal reimbursement arrangement that lets a business repay owners and employees for...
Home Office Deduction
The home office deduction allows self-employed taxpayers to deduct the costs of the portion of their home used...
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