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

If you own an S-Corp, C-Corp, partnership, or multi-member LLC, there's a provision in the tax code that lets you rent your personal home to your business for up to 14 days per year — and pay zero tax on the income. Your business deducts the rental as an expense, and you exclude the payment from your personal income. It's one of the few places in the tax code where the same dollar gets a deduction on one side and an exclusion on the other.

This is called the Augusta Rule, and it's codified in IRC Section 280A(g).

What the law actually says

Section 280A(g) of the Internal Revenue Code states that if a dwelling unit used by the taxpayer as a residence is rented for fewer than 15 days during the tax year, two things happen:

1. The rental income is not included in gross income — you don't report it
2. No rental-related deductions are allowed (you can't deduct expenses against income that doesn't exist)

The rule got its informal name from homeowners in Augusta, Georgia, who rented their houses to attendees of the Masters golf tournament each spring. But the provision applies to any homeowner anywhere in the country, regardless of the event or reason for the rental.

How business owners use it

The most common use isn't renting to golf fans — it's renting your home to your own company for legitimate business purposes:

• Board meetings or partner strategy sessions
• Annual planning retreats
• Client dinners or investor presentations
• Team training or company off-sites
• Holiday parties or end-of-year celebrations

Your business pays you fair market rent for the day, deducts it as a business expense, and you receive the income tax-free. At a rate of $1,000–$2,500 per day (depending on your area and property), 14 days could mean $14,000–$35,000 in tax-free income — and a matching deduction for the business.

Who qualifies — and who doesn't

Eligible business structures:

• S-Corporation
• C-Corporation
• Partnership
• Multi-member LLC (taxed as partnership or S-Corp)

Not eligible:

• Sole proprietorships
• Single-member LLCs (disregarded entities)

The IRS views a sole proprietor and their business as the same legal entity — you can't rent to yourself. The business must be a separate legal entity from you personally.

The 14-day cliff

This is the most critical rule: the limit is 14 days, not 15. If you rent your home for 15 or more days in a calendar year, the entire rental income becomes taxable — not just the income from the extra days. It's an all-or-nothing threshold.

Every rental day counts, including partial days. If you rent on 14 separate occasions throughout the year, that's your limit. Track them carefully.

What your business needs to do

The IRS is aware this deduction is commonly abused. To use it properly and survive an audit, your business should do the following before each rental event, not after:

1. Establish fair market rent

Research what comparable venues charge in your area. Look at:

• Local hotel conference room or event space rates
• Short-term rental platforms (Airbnb, VRBO) for similar homes
• Event venue pricing for your area

Document 3–5 comparable rates with screenshots, links, or printouts. This is called "contemporaneous evidence" — it needs to exist before or at the time of the rental, not months later during tax prep.

2. Create a written rental agreement

Even though you're renting to your own company, treat it like an arm's-length transaction. The agreement should include:

• Names of lessor (you) and lessee (your business entity)
• Property address
• Specific dates of rental
• Rental rate per day and total amount
• Terms (what's included — space, parking, AV equipment, etc.)

3. Document the business purpose

For each rental event, record:

• The business reason for using the space (e.g. "Q2 strategy planning meeting")
• Agenda or meeting outline
• List of attendees
• Duration of the event

Keep meeting notes or minutes. The IRS wants to see that a real business activity took place — not that you called a family dinner a "board meeting."

4. Issue an invoice and make a real payment

Your business should pay you via check or bank transfer — not cash. Create an invoice for each rental event. The paper trail matters:

• Invoice from you to the business
• Payment from the business bank account to your personal account
• Record both sides: a journal entry in the business books (debit Rent Expense, credit Cash) and the deposit in your personal records

Recording it in Twin Owls

In your business entity's books, each rental event is a journal entry:

Create an expense account like "Facility Rental — Augusta Rule" or "Venue Rental" so these transactions are easy to identify at tax time. Attach the rental agreement and meeting notes as documents on the journal entry for audit readiness.

Common mistakes to avoid

• Exceeding 14 days — Even one extra day makes all the income taxable. When in doubt, stop at 12-13 days to leave a buffer.
• Charging above fair market value — If comparable venues charge $800/day and you charge $3,000, that raises a red flag. Be reasonable.
• No business purpose — "Renting" your home to your business on a random Tuesday with no meeting or event is not defensible.
• Backdating documentation — The IRS looks for documentation created at the time of the event. Creating rental agreements in March for events that happened the prior November is a problem.
• Using it with a sole proprietorship — This doesn't work. The business must be a separate legal entity.

Key takeaway

The Augusta Rule is a legitimate, well-established tax provision — not a loophole. But it only works if you follow the rules precisely: stay under 15 days, charge fair market rent, document everything, and use it with a qualifying business structure. When done correctly, it's one of the simplest ways to move money from your business to yourself tax-free.

References

• 26 U.S. Code § 280A(g) — Full statutory text at Cornell Law Institute
• IRS Publication 527: Residential Rental Property — IRS guidance on rental income reporting