Three requirements. First, 14-day maximum — rent your home to your business for no more than 14 days in the tax year. Day 15 converts the entire arrangement to a taxable rental activity, and the benefit disappears. Second, fair market rent — the daily rate must match comparable local venue pricing for similar space; the IRS uses actual audit comparables and won’t accept made-up numbers. Third, real business purpose — the days must be for legitimate business activity (board meetings, strategy sessions, team offsites), not just paperwork. Get those three right and the arrangement is bulletproof.
What It Is
The statute got its nickname from Augusta, Georgia — homeowners there realized they could rent their houses to golf-tournament attendees for one week each April and never pay income tax on the rental proceeds. The rule is straightforward: if you rent a dwelling unit to someone else (anyone, including your own business) for fewer than 15 days in a year, the rental income is excluded from your gross income. You don’t report it. You don’t deduct related expenses. The entire transaction is invisible on your personal return.
When your business is the renter, the numbers work like this:
- Your business pays you (the homeowner) a daily rental rate for use of your home
- The business deducts the full payment as an ordinary business expense
- You receive the payment, issue a 1099-MISC from the business if over $600/year, but owe no personal tax on it
- Net effect: the business rents space, gets a deduction, and the money sits with you, tax-free
At typical rates — $800–$1,500 per day for a meeting venue in most metros — a full 14-day allowance puts $11,200–$21,000 in your pocket tax-free. Your tax savings depend on your marginal rate and the entity structure of the business that paid the rent.
Who This Works For
You need to own a business entity separate from yourself that actually uses the space. The typical beneficiaries:
- S-Corp owners — the most common setup. The business deducts the rental payment, reducing pass-through income that would otherwise hit your K-1.
- C-Corp owners — business deducts against corporate income at the C-Corp rate. Higher marginal value if the C-Corp is profitable.
- Partnership / Multi-member LLC owners — deduction passes through, reducing your allocated taxable income.
- Sole proprietors with a home office — harder case. If you already deduct a home office, the IRS may argue you can’t also rent the same space as a separate transaction. Get CPA guidance.
W-2 employees with no side business have nothing to rent the home to — the rule doesn’t apply.
The Three Audit-Proofing Requirements
1. The 14-Day Cap Is Strict
Day 14 = fine. Day 15 = you’ve converted your home to a taxable rental for the entire year. Not just the 15th day — all 15 days become reportable rental income. Stay under 14. A common best practice is to plan for 12 days to leave buffer for any unexpected additional use.
2. Fair Market Value Documentation
The single biggest audit risk is inflated rent. The IRS expects the daily rate to match what your business would pay at a comparable commercial venue. The safest documentation method:
- Get 3 quotes from local venues that rent similar space (hotel meeting rooms, restaurant private rooms, co-working meeting spaces, short-term furnished event venues)
- Collect the quotes in writing — email, PDF, or screenshot the venue’s rate card
- Average the three quotes to determine your daily rate
- Refresh the comparables every 2–3 years or when you materially change the arrangement
For reference, typical 2026 daily rates by metro:
| Metro | Meeting venue day rate (10–20 person) |
|---|---|
| New York, San Francisco | $1,500 – $3,500 |
| Los Angeles, Boston, Chicago, DC | $1,200 – $2,500 |
| Austin, Denver, Seattle, Miami | $900 – $1,800 |
| Mid-market (Phoenix, Nashville, Raleigh) | $700 – $1,500 |
| Smaller metros, suburban | $500 – $1,000 |
Rates reflect observed pricing at hotel meeting rooms, coworking venues, and event spaces. Your specific market and property type may differ.
3. Real Business Purpose and Documentation
Each rented day needs a business purpose that wouldn’t be trivially achievable from the business’s own office. For every day:
- Written meeting minutes with attendees, agenda, and resolutions (for S-Corp board meetings, these are required anyway)
- Signed rental agreement between the business and the homeowner — standard commercial lease format, with date, daily rate, space description, and purpose
- Business check or ACH payment from the business to the homeowner on or near the meeting date
- Form 1099-MISC (box 1: Rents) issued from the business to the homeowner if aggregate rent is over $600 in the year
Common business uses the IRS has accepted: quarterly board meetings, annual strategy planning, key-client entertainment events, leadership team retreats, tax/legal coordination meetings, and content production sessions where the home serves as set.
Numbers: What You Actually Save
The benefit flows through as a business deduction, so your savings equal the deduction times the effective tax rate of the income the deduction offsets. For an S-Corp owner in the 32% federal bracket:
- 14 days × $1,200/day = $16,800 business deduction
- Federal savings at 32%: ~$5,376
- Plus state savings (varies by state) and potentially SE tax savings for portions of S-Corp income
- Homeowner receives $16,800 tax-free
Mistakes That Kill the Benefit
- Renting for 15+ days. The whole arrangement becomes reportable income. Hard cap.
- No contemporaneous documentation. Pulling up comparable venue quotes after an audit notice lands doesn’t help; the IRS wants to see records dated at or near the transaction.
- Inflated rates. Charging $5,000/day in a market where comparable venues charge $1,200. Audit risk is high.
- Sham meetings. "Board meetings" where no business was discussed won’t survive scrutiny. The purpose has to be real.
- Paying yourself personally and claiming the deduction. The business entity has to be the payer, not you individually.
Where It Fits
The Augusta Rule is a small-dollar, high-discipline play. It won’t 10× your tax situation, but it’s genuinely free money if you already hold business meetings somewhere — and your home is somewhere you already own. It stacks cleanly with other strategies: cost segregation on rental property you own, Backdoor Roth for retirement savings, and S-Corp compensation optimization if you’re self-employed.
Frequently Asked Questions
What is the Augusta Rule and how much can I save?
The Augusta Rule (IRC Section 280A(g)) allows you to rent your primary residence to your own business for up to 14 days per year, with the rental income tax-free to you as the homeowner. The business deducts the rent as a meeting or event expense. At a fair market rate of $1,200/day for 14 days, the business deducts $16,800 while you receive $16,800 tax-free. At a 32% federal bracket, the net savings are approximately $5,400 plus applicable state tax savings. The key requirement is staying at or under 14 days.
What documentation does the IRS require for the Augusta Rule?
Each rental day requires four items: a written rental agreement between the business and homeowner with date, rate, and purpose; written meeting minutes with attendees, agenda, and resolutions; payment from the business entity (check or ACH, not personal funds); and fair market value substantiation showing comparable venue rates in your area. If total rent exceeds $600, the business must issue Form 1099-MISC to the homeowner. Records should be contemporaneous -- created at or near the event date, not reconstructed after the fact.
What happens if I rent my home for more than 14 days?
If you exceed 14 days, the entire arrangement becomes taxable. All rental income is reportable, not just the income from days 15 and beyond. The 14-day threshold under IRC Section 280A(g) is a hard cap with no exceptions. The benefit works only if you stay at or below 14 days per tax year. This is one of the most common mistakes with the Augusta Rule -- there is no partial exclusion for the first 14 days if you go over.
Can I combine the Augusta Rule with cost segregation on my rental properties?
Yes. The Augusta Rule applies to your primary residence, while cost segregation applies to your investment properties. They operate on completely different code sections and do not conflict. Many real estate investors use both: cost segregation to accelerate depreciation deductions on rental properties (studies start at $495 from Cost Seg Smart), and the Augusta Rule to generate tax-free income from their primary home. Together with strategies like Backdoor Roth and S-Corp compensation optimization, they form a comprehensive tax reduction approach for high-income earners.