Every spring, homeowners in Augusta, Georgia, rent out their houses to visitors flooding in for a famous golf tournament, and they collect that income completely tax-free. The provision that made it possible was not written for them, but they used it so visibly that it came to be known by their name.
Here is the part that matters for you: the same rule applies to your home and your business. If you are self-employed, you can rent your personal residence to your own company for up to 14 days a year, deduct the rent through your business, and pay zero personal income tax on the money you collect. It is one of the cleanest strategies in the tax code, and most business owners have never heard of it.
The Augusta Rule is the nickname for Section 280A(g) of the Internal Revenue Code. The provision says that if you rent out a personal residence for 14 days or fewer during the year, you do not have to report the rental income at all.
Stack that against the fact that your business can deduct legitimate expenses, and a strategy appears. Your business needs space for meetings. You own space. So your business pays you fair market rent to use it. The business writes off the payment as an ordinary business expense, and because the rental period stays at or under 14 days, you exclude every dollar of that income from your personal return.
The money effectively moves from your business to your personal pocket, generates a deduction on the way out, and lands tax-free. For an S-Corp owner, that is a rare combination.
The mechanics are simple once you see them laid out.
First, your business holds a legitimate event at your home, such as a quarterly planning session, a strategy retreat, an annual board meeting, or a team workshop. Second, your business pays you rent for the use of the space at a fair market rate. Third, the business deducts that rent as a business expense under the ordinary-and-necessary standard. Fourth, you report the arrangement correctly and exclude the income under Section 280A(g) because you stayed within the 14-day limit.
The result is a deduction for the business and tax-free income for you, on the same dollars.
The rent has to be what an unrelated party would actually charge. You cannot invent a number.
The cleanest way to set it is to get quotes from comparable venues in your area: hotel meeting rooms, conference spaces, or event venues that fit the size and purpose of your gathering. Save those quotes. If a local hotel charges a certain rate to rent a comparable room for a day, that gives you a defensible basis for what your home is worth for the same use.
There is no fixed dollar limit on the Augusta Rule. People often search for an "Augusta Rule dollar limit," but there is no set cap published by the IRS. Your ceiling is fair market value multiplied by your number of rental days, up to 14. A defensible daily rate times a handful of legitimate meeting days is what sets your number, not an arbitrary amount.
Paying yourself wildly above market is the fastest way to lose the deduction. The IRS will disallow anything that appears inflated, and an above-market rate signals exactly the kind of arrangement that invites closer scrutiny. Reasonable and documented beats aggressive and exposed every time.
This strategy is generous, which means the boundaries are firm.
The 14-day limit is absolute. Rent your home for 14 days or fewer, and the income is excluded. Cross into day 15, and you lose the exclusion on all of it, not just the extra day. There is no partial credit.
The business purpose has to be real. Each rental day needs to correspond to genuine business activity. A meeting that exists only on paper will not survive scrutiny.
The rent has to be fair market value. Document comparable rates and prices within them.
The paperwork has to be in place before you need it. Agendas, notes, attendee lists, and a clean record of the payment are what turn a smart strategy into an audit-proof one.
Say you run a consulting business as an S-Corp and you host one substantive strategy meeting at your home each quarter, four days total for the year. You research comparable venues and find that a suitable meeting space in your area rents for a defensible daily rate. Your business pays you that rate for each of the four days.
Your business deducts the full amount as a business expense, lowering its taxable income. You receive the payment and, because you rented for only four days, you exclude it entirely from your personal return under Section 280A(g). The same dollars produced a business deduction and tax-free personal income. Scale the daily rate and the number of legitimate meeting days, and the annual benefit grows accordingly, right up to the 14-day ceiling.
This works best for established business owners who genuinely conduct business activities that can reasonably happen at home: consultants, agency owners, real estate professionals, and other service businesses with a real need for periodic meetings, planning sessions, or content production.
It is a poor fit if you cannot point to a legitimate business reason for using your home, if your business has no income to deduct, or if you are not willing to maintain documentation. The strategy is not a way to shuffle money for its own sake. It rewards businesses that already have a reason to gather and simply formalize where they do it.
If your business is not yet an S-Corp, this is one of several reasons structure matters and how entity choice changes which strategies are available to you.
Documentation is the entire ballgame. Treat each rental like an arm's-length transaction with a third party.
For every event, keep a written agenda showing the business purpose, notes or minutes from the meeting, a list of who attended, and the comparable-venue quotes you used to set the rate. Have your business issue payment using a traceable method to ensure a clean money trail. Many owners formalize the arrangement with a simple written rental agreement between themselves and their business.
This is also where an accountable plan and clean bookkeeping pay off, the same disciplines that protect every other reimbursement you run through your business. Our guide to business accountable plans covers the recordkeeping habits that make strategies like this defensible, and if you want broader context on staying audit-ready, start with how to protect yourself from an audit.
Yes. It is set forth in Section 280A(g) of the Internal Revenue Code and applies nationwide. There are no publicly known changes scheduled that would alter it. The strategy is legitimate when you follow the requirements: 14 days or fewer, fair market rent, genuine business purpose, and proper documentation.
Up to 14 days per calendar year. The limit is strict. If you rent for 15 days or more, you lose the tax-free exclusion entirely, and the income becomes reportable, so plan to stay comfortably within the limit.
Research the cost of comparable spaces in your area, such as hotel meeting rooms, conference centers, or event venues of similar size and quality. Collect written quotes and use them to set a defensible daily rate. Keep those quotes on file as proof that your price reflected the real market.
Any genuine business activity that reasonably takes place at your home: board meetings, strategy and planning sessions, team retreats, training workshops, or content production days. The keyword is genuine. Each rental day must correspond to a real, documented business event.
Yes. The Augusta Rule is available to most self-employed people, regardless of entity, including single-member LLCs and sole proprietors, as long as there is a genuine business that can pay fair market rent for legitimate use of your home. It also applies only to a personal residence, so a second home you use personally can qualify, while a pure rental property cannot. The mechanics are cleanest for an S-Corp, where the rent is a clear deduction to the business and tax-free income to you, but the rule itself is not limited to one structure.
The rental income is excluded from your taxable income under Section 280A(g) when you stay within 14 days, so you do not pay tax on it. Your business still deducts the rent as an expense. Because reporting mechanics can vary by situation, have your tax professional handle how it appears on your returns.
If you followed the rules and kept your documentation, you are in good shape. The strategy survives scrutiny on the strength of your records: agendas, meeting notes, attendee lists, comparable-rate quotes, and a clean payment trail. The owners who run into trouble are the ones who claimed meetings that did not happen or paid themselves inflated rates without backup.