The Augusta Rule: Renting Your Home to Your Business Tax-Free

Updated May 6, 2026 · 8 min read

The Augusta Rule (formally Section 280A(g) of the Internal Revenue Code) lets homeowners rent their home for up to 14 days per year and exclude the rental income entirely from federal taxable income. For S-corp, C-corp, and multi-member-LLC/partnership owners, this creates a legitimate strategy (sole proprietors and single-member LLCs filing Schedule C cannot use it — see "Who can use this" below): rent your home to your own business for meetings or events, get a tax deduction on the business side, and pay no income tax on the personal side. Done right, this can shift $14,000+ of pre-tax income to tax-free for high-bracket taxpayers.

The basic mechanic

Section 280A(g) says: if you rent your home for fewer than 15 days per year, the rental income is not taxable income to you, AND the related expenses are not deductible.

Combined with the deductibility of legitimate business rent (Section 162 ordinary and necessary business expense), you get:

• Business side: Deducts rent paid (e.g., $1,500/day × 14 days = $21,000 in rent expense, lowering taxable business income).
• Personal side: Receives the $21,000 but excludes it from gross income under Section 280A(g).

Net effect: $21,000 moves from business income (taxed) to personal income (untaxed) without ever appearing on a 1040 as taxable income.

The legitimate use case

You must actually have a business reason to rent your home. The IRS doesn't accept "I rented to my LLC for no purpose" as a deductible business expense. Legitimate uses:

• Annual board meetings (for S-corps, C-corps with multiple shareholders)
• Quarterly business strategy retreats
• Client entertainment events
• Team retreats / off-sites
• Photography or video shoots for marketing
• Workshops or training events

The IRS standard: "ordinary and necessary" for the business. A solo freelancer claiming 14 days of "annual planning meetings with myself" in their own home is going to lose in audit.

The fair-market-rent requirement

The rental rate must be reasonable — what comparable venues in your area charge. You can't rent your $400k suburban home to your business for $5,000/day. Fair market is what an unrelated third party would pay.

Documentation:

• Get 2-3 quotes from comparable venues (Airbnb listings, hotel meeting rooms, event spaces) in your area for similar capacity events.
• Set your rate in line with these quotes.
• Keep written records of the comparison.

Typical defensible daily rates: $500-$2,500/day for residential events, depending on home size, location, and event capacity. Higher in major cities.

The 14-day limit (strict)

You can rent at most 14 days per year. On day 15, the rule flips entirely — ALL rental income (including the previous 14 days) becomes taxable, AND you must apportion home expenses against the rental.

Strategy: track days carefully. If your business needs to use the home for the 15th time, find an alternate venue.

The documentation checklist

For each Augusta-rule rental, keep:

1. Rental agreement — written contract between you (homeowner) and your business entity, dated, signed by both parties.
2. Business purpose statement — what the meeting/event was for, agenda or itinerary.
3. Attendee list — who attended, in what business capacity.
4. Comparable rent research — quotes from 2-3 other venues showing your rate is reasonable.
5. Payment record — bank or check transfer from the business account to your personal account.
6. Day-counting log — which days were Augusta-rule days vs personal use.

Without all six, your audit defense is weak.

Sole proprietor vs S-corp

The Augusta Rule requires a separate-entity business structure. It works for S-corps, C-corps, and multi-member LLCs/partnerships. It does NOT work for sole proprietors or single-member LLCs filing Schedule C — see the highlighted bullet below:

• Sole proprietor / single-member LLC (Schedule C): The Augusta Rule does NOT work here. The "business" and "you" are the same taxpayer for federal income tax — paying yourself rent is a wash, and the IRS / Tax Court has consistently disallowed Schedule-C-to-personal Augusta deductions. To use §280A(g), you need a separate-entity structure (S-corp, C-corp, or multi-member partnership) where the business pays an unrelated taxpayer (you, personally).
• S-corp: The S-corp is a separate entity from you. The S-corp deducts the rent (lowering K-1 income), and you exclude it under 280A(g). Cleanest application.
• C-corp: Same as S-corp, with the added benefit of avoiding double taxation on the $21k that would otherwise flow through.

State tax conformity

Most states conform to federal Section 280A treatment — meaning the rental income is also state-tax-free. A few states (California, New York) may have nuances. Check your state-specific page.

Common Augusta Rule mistakes

• Renting more than 14 days. Day 15 destroys the entire deduction structure.
• No business purpose. "Annual self-meeting" doesn't qualify. The event must be a real business activity.
• Excessive rate. Renting your home for $10,000/day when comparable venues charge $1,500/day is a red flag.
• No documentation. Without contract, agenda, attendee list, and rate research, you lose in audit.
• Mixing personal and business use on same day. If the day starts as personal and ends as business, the IRS may disallow.
• Sole proprietor / single-member LLC (Sch C). The Augusta Rule does NOT apply. The "business" and "you" are the same taxpayer for federal income tax — Tax Court has consistently disallowed Sch-C-to-personal Augusta deductions. Convert to S-corp first if you want this strategy.

The "personal" test

If you (the homeowner) attend the event yourself, days you participate count as personal use of the home for that day in some interpretations. Most CPAs handle this by holding events on days you'd be home anyway and being clear that you're attending in your business capacity, not as homeowner.

Bottom line

The Augusta Rule is a real, IRS-blessed tax strategy when applied correctly: rent your home to your business up to 14 days/year, with legitimate business purpose, fair-market rate, and full documentation. For high-income S-corp owners, this can shelter $14,000-$30,000/year from federal tax. Set it up with a CPA the first year, then run it annually. Use our calculator to estimate the tax savings at your bracket.