IRC §280A(g) allows you to rent your personal residence to your business for up to 14 days per year without reporting the rental income on your personal return. Your business deducts the rent as a business expense. At $2,000 per day for a business meeting or retreat, that is $28,000 of tax-free income.
Getting the deduction right is not just about whether it is allowed — it is about how you set it up.
The home must be rented for a legitimate business purpose — board meetings, team retreats, strategy sessions, client events. The business activity must actually occur at the home.
Document each meeting with an agenda, attendee list, and meeting minutes. Research comparable meeting space rental rates in your area to establish fair market value.
Have your business write a check to you personally for the rental. Keep the total at 14 days or fewer per year. Do not report the rental income on your personal return (it is excluded under §280A(g)).
Do not exceed 14 days. Do not charge above fair market rate. Do not use this strategy without documented business meetings.
Research hotel conference room rates in your area — these are often $1,500 to $3,000 per day. Use that as your benchmark for a defensible rental rate.
When structured correctly, this deduction can significantly reduce your taxable income.
Here is how this deduction typically works in real situations:
A sole proprietor rents their home to their business for 10 days of client meetings at $1,500 per day.
An S-Corp rents the owner's home for 14 days of board meetings and strategy sessions at $2,000 per day.
A business owner rents their home for 20 days and charges $5,000 per day with no meeting documentation.
Key Takeaway: The difference between a valid deduction and a denied one usually comes down to documentation, usage percentage, and proper structuring. The same expense can be fully deductible, partially deductible, or not deductible at all — depending on how it is handled.
The Augusta Rule deduction is primarily governed by Internal Revenue Code (IRC) Section 280A(g). This section specifically states that if a dwelling unit is rented for fewer than 15 days during the taxable year, the rental income derived from it is not included in gross income, and no deduction otherwise allowable on account of the rental activity is allowed. This effectively creates a 'tax-free income' window for the homeowner.
📞 Book a Free Call →You can rent your home to your business for a maximum of 14 days within a calendar year to qualify for the Augusta Rule's benefits. If you exceed 14 days, the rental income becomes taxable, and the deduction rules change significantly, requiring you to report it as rental income and potentially deduct associated expenses.
📞 Book a Free Call →YES — this expense IS tax deductible for your business. The rent paid by your business is a legitimate business expense. Crucially, because of IRC Section 280A(g), the income you receive personally from your business for this rental is entirely tax-free, provided you stay within the 14-day limit.
📞 Book a Free Call →For your business to deduct the rental expense, the rental must be for a legitimate business purpose, such as board meetings, client presentations, or strategic planning sessions. The rent charged must also be a fair market value for a similar commercial space in your area for the duration of the rental. It cannot be an arbitrarily high amount.
📞 Book a Free Call →You must have a formal written rental agreement between you (as the homeowner) and your business entity, detailing the rental dates, purpose, and agreed-upon fair market rent. Keep records of the payment from the business to you, meeting agendas, attendee lists, and evidence of comparable rental rates in your area to substantiate the fair market value.
📞 Book a Free Call →Yes, a sole proprietorship can utilize the Augusta Rule. However, the 'business' and 'owner' are legally the same entity for tax purposes. To create a clear distinction for the Augusta Rule, you would essentially be renting your personal home to your sole proprietorship for its business activities, with the payment flowing from your business account to your personal account.
📞 Book a Free Call →For an S-Corp or LLC, the Augusta Rule works very effectively. The entity pays you, the owner, for the use of your home. This payment is a deductible expense for the S-Corp or LLC, reducing its taxable income. As the homeowner, you receive this income tax-free under IRC Section 280A(g), as long as the 14-day limit is not exceeded.
📞 Book a Free Call →Fair market value is the price a willing buyer would pay a willing seller in an arm's-length transaction. To prove it, you should research local event spaces, conference rooms, or short-term commercial rentals of similar size and amenities for comparable durations. Obtain quotes or print out advertisements to keep with your records. Overstating the rent is a common audit trigger.
📞 Book a Free Call →No, under IRC Section 280A(g), 'no deduction otherwise allowable on account of the rental activity shall be allowed.' This means you cannot deduct prorated utilities, mortgage interest, property taxes, or depreciation specifically related to the 14 days your home was rented to your business. The benefit is solely the tax-free income and the business deduction.
📞 Book a Free Call →There are no specific types of businesses or professions explicitly excluded from using the Augusta Rule, as long as they have a legitimate business need to rent a space for meetings or other official functions. The key is demonstrating a clear business purpose for the rental, regardless of the industry.
📞 Book a Free Call →If you rent your home for 15 days or more, the Augusta Rule no longer applies. All rental income becomes taxable, and you would then be required to report it on Schedule E (Form 1040). You would also be able to deduct a pro-rata share of expenses like mortgage interest, property taxes, utilities, and depreciation, but the tax-free income benefit is lost.
📞 Book a Free Call →The Augusta Rule is specifically for temporary rental periods for business activities, not for regular home office use. A home office deduction under IRC Section 280A(c)(1) has different, stricter requirements regarding exclusive and regular use. The Augusta Rule applies to distinct, short-term rental events, such as quarterly board meetings or annual strategic planning sessions.
📞 Book a Free Call →While there's no explicit dollar limit, the rent charged must always be reasonable and reflect fair market value. Charging an exorbitant amount significantly above local comparable rates will raise red flags with the IRS and could lead to disallowance of the deduction and potential penalties. Uncle Kam always advises keeping detailed records of market research.
📞 Book a Free Call →As of now, there are no specific proposed changes to IRC Section 280A(g) or the Augusta Rule for 2026 tax law updates. The rule has been a stable part of the tax code for decades. However, tax laws are subject to change, so staying informed about legislative developments is always prudent.
📞 Book a Free Call →Yes, you can rent a portion of your home, such as a specific room or a finished basement, to your business under the Augusta Rule. The key is that the rented space is used for a legitimate business purpose during the rental period, and the fair market value should reflect the use of that specific area, not the entire home.
📞 Book a Free Call →Common mistakes include exceeding the 14-day limit, failing to establish a legitimate business purpose for the rental, charging excessive rent that isn't fair market value, and lacking proper documentation like a written rental agreement and proof of payment. Also, confusing it with the home office deduction is a frequent error. Uncle Kam helps clients avoid these pitfalls.
📞 Book a Free Call →Yes, the Augusta Rule applies even if you rent your home to a business you do not own. IRC Section 280A(g) simply states that if a dwelling unit is rented for fewer than 15 days, the income is not included in gross income. The ownership relationship between the homeowner and the renting business is not a determining factor for the homeowner's tax-free income status.
📞 Book a Free Call →The Augusta Rule applies to any 'dwelling unit' that you use as a residence. This includes your primary residence and vacation homes. You can utilize the rule for either, as long as the 14-day limit is not exceeded for that specific property and all other conditions, like legitimate business use and fair market rent, are met.
📞 Book a Free Call →No, there is no specific IRS form to file for the Augusta Rule. Because the income is excluded from gross income under IRC Section 280A(g), you do not report it on your personal tax return. Your business, however, will deduct the rental payment as an ordinary and necessary business expense on its respective tax form (e.g., Schedule C, Form 1120-S, Form 1065).
📞 Book a Free Call →No, the income received from renting your home to your business under the Augusta Rule does not count as self-employment income. Since it's excluded from gross income under IRC Section 280A(g), it is not subject to self-employment taxes (Social Security and Medicare). This is a significant advantage of utilizing this specific tax strategy.
📞 Book a Free Call →Connect with a MERNA\u2122-certified tax professional to ensure you capture every deduction.
