The Augusta Rule: the quick, careful version

By Tom, CPA · Updated October 27, 2026

Part of: Easy Tax Strategies

TL;DR: If you rent your home for fewer than 15 days in a year, the rent is excluded from your income under Section 280A(g). A business you own, typically an S or C corporation, can rent your home for genuine business meetings and deduct reasonable rent. It needs a real business purpose, market rent, documentation, and an entity that is separate from you.

Educational only, not tax, legal, or investment advice. Examples are illustrations, not predictions. Rules and limits change; verify current figures and talk to a qualified professional about your situation.

The Augusta Rule is named for homeowners near Augusta National who rent out their houses during the Masters golf tournament and owe no tax on the rent. Section 280A(g) says, more or less, that if you rent your home for fewer than 15 days a year, the income is not reported and the rental expenses are not deducted. Somewhere along the way, people noticed that "renting your home" could include renting it to your own business. That works, carefully. It also gets abused, and the Tax Court has noticed.

Rules from the Internal Revenue Code and IRS Publication 527, checked October 27, 2026. Part of easy tax strategies. The broader rule is in the 14-day rental rule.

CPA Warning Label: The IRS and Tax Court have disallowed Augusta Rule deductions with inflated rent or no real meetings; treat it as audit-sensitive and document everything.

Business purpose

The rental must be for genuine business use: board meetings, shareholder meetings, planning retreats, client events or training sessions that would otherwise require renting a space. The business needs to exist separately from you, which is why the strategy is usually used with S corporations and C corporations. A sole proprietor paying rent to themselves gets nothing: the deduction and the income are on the same return. Family dinners where business is mentioned once are not board meetings.

Fair rent comps

The rent must be what an unrelated party would pay for comparable space. Gather comps:

• Hotel meeting room or conference center rates for a similar group size and duration.
• Coworking or event space rental quotes.
• Short-term rental rates for comparable homes, adjusted for meeting use.

Keep screenshots or quotes in the file. In Sinopoli v. Commissioner (T.C. Memo. 2023-105), the Tax Court disallowed most of the rent deducted by a business for meetings at the owners' homes, finding inadequate support for the rates and the meetings. Inflated rent is the fastest way to lose the deduction.

Minutes and invoice

• A written rental agreement for each date or a master agreement listing them.
• An agenda and minutes for each meeting, with attendees.
• An invoice from you to the business.
• Payment from the business bank account to your personal account.
• The rent comps used to set the rate.

14-day cap

The exclusion applies only if the home is rented for fewer than 15 days during the year, counting all renters, not just your business. If you also rent the house on a short-term rental platform for a week, those days count. At 15 days or more, all the rental income becomes reportable, with expenses allocated under the vacation home rules.

Example

Illustration: Frugal Fran owns an S corporation and holds 12 quarterly-style planning and board sessions at her home, each documented with an agenda, minutes and attendees. Comparable local meeting space for her group size costs $500 a day; she charges that rate. The corporation pays $6,000 and deducts it, reducing pass-through income. Fran excludes the $6,000 under Section 280A(g), assuming no other rental days. At a 24% bracket, that saves about $1,440 of federal income tax. Lavish Larry charged his business $5,000 a day for "strategy sessions" that were mostly barbecues; his file is what examiners call a teaching moment.

Step-by-step setup

1. Confirm your business is a separate taxpayer, usually an S or C corporation.
2. Decide the meetings you genuinely need during the year and their dates.
3. Collect three or more rent comps for similar space and group size.
4. Sign a rental agreement between you and the business.
5. Hold the meetings; record agendas, attendees and minutes.
6. Invoice the business and get paid from its bank account.
7. Count total rental days, keeping them at 14 or fewer.
8. Keep the file at least as long as the business return's statute of limitations.

Common questions from examiners

If audited, expect questions like: Why did the business need to meet outside its office? Who attended? What was decided? How did you pick the rate? Why was the home appropriate for the meeting size? Could you show the payment from the business account? Each answer should already be in your file. If the honest answer to the first question is "to use the Augusta Rule," the strategy is on weak ground. Compare with other moves that need less paperwork, such as picking Roth or pre-tax wisely.

Reporting

The business deducts the rent as an ordinary expense on its return. Because you, the homeowner, are excluding the income, you do not report it on Schedule E. Businesses generally issue Form 1099-MISC for rents of $600 or more paid to individuals; the 2025 law raised that threshold to $2,000 for payments made after 2025. Even if issued, the homeowner can show the exclusion on the return. Ask a tax professional how your software handles this, since a mismatch can trigger a notice.

Who should skip it

• Sole proprietors and single-member LLCs taxed as disregarded entities.
• Anyone without real meetings that would otherwise need space.
• Owners who already rent the home 15 or more days.
• People who will not keep records. Without paperwork, this is not a strategy; it is a guess.

Bottom line

The Augusta Rule is a real provision with a narrow sweet spot: an owner of a separate corporation who genuinely holds meetings at home and charges what a hotel would. Anything beyond that invites trouble.