Section 280A(g) lets your business rent your home up to 14 days a year — the business deducts fair rent and you exclude the income. Here's how to do it right and what breaks it.
The Augusta rule — Section 280A(g) — says that if you rent out your personal residence for 14 or fewer days in a year, the rental income is completely excluded from your income. You don't report it. When the renter is your own S corporation or partnership, the business deducts fair-market rent while you receive it tax-free. Done correctly, that's a legitimate deduction on one side and untaxed cash on the other.
The rule got its name from Augusta, Georgia, where homeowners rent their houses to Masters visitors for a week. Business owners use the same statute for board meetings and planning retreats held at home. It's a real strategy, but it's modest, documentation-heavy, and easy to blow up. Like most of the moves in our bonus depreciation and Section 179 playbook, the tax benefit follows real business activity — it can't substitute for it.
The result: money moves from the business to you, deductible to the business, tax-free to you. At a fair day rate of $500 and 12 meetings a year, that's $6,000 shifted out of business income with zero tax to you — worth perhaps $1,500-$2,400 at typical rates. Meaningful, not life-changing.
The rental has to serve a genuine business purpose, the kind you'd pay an outside venue for:
What doesn't work: renting your home to "work from home" every Tuesday. That's not an event needing a venue — that's a home office, and it has its own rules. S corp owners should handle everyday home-office costs through an accountable plan reimbursement instead; the two strategies are complementary, not interchangeable. Our guide to the S corp home office reimbursement walks through that side.
Augusta rule deductions get disallowed in audits for one reason: no proof. In the cases the IRS has won, owners had no comparable rate data, no meeting records, and rents like $3,000 a day for a living room. Build the file as you go:
The rate is where audits are won or lost. Charge what a local venue charges for a day — documented — not what a resort charges for a wedding.
The exclusion is all-or-nothing. Rent your home for 14 days, and every dollar is tax-free. Rent it for 15 days — counting all rentals of the home that year, including an Airbnb weekend — and the exclusion disappears entirely: all the rental income becomes taxable. If you also rent your home to vacationers, count those days before scheduling business rentals. Track days on a calendar and stop at 14.
The strategy requires two separate taxpayers: a business that deducts rent and an individual who excludes it. A sole proprietorship or single-member LLC taxed on Schedule C is you — you can't meaningfully rent your home to yourself, and the IRS and courts don't respect self-rental on Schedule C. The Augusta rule works when the renter is a separate entity for tax purposes: an S corporation, C corporation, or partnership. It's one of several strategies that only open up once you have an entity, which is worth factoring into your structure decision.
The owners who keep this deduction are the ones who treat it as a routine, not a year-end journal entry. A workable cadence:
Booked this way, the rent shows up in the business's records as a clean, recurring venue expense with a paper trail behind every payment — indistinguishable in form from renting a conference room across town, which is exactly the standard an examiner applies.
The ceiling is 14 days times a defensible local day rate. If comparable meeting space in your area runs $400-$700 a day, you're looking at roughly $5,600-$9,800 of deductible-to-the-business, tax-free-to-you rent per year. At a 30% combined rate, that saves perhaps $1,700-$2,900 in tax annually. Promoters pitching five-figure Augusta deductions are usually inflating the day rate, which is exactly what gets clients in trouble.
Treat it as a solid, repeatable line item in a broader plan — alongside retirement contributions, accountable plans, and timing strategies — rather than a loophole to max out.
The Augusta rule lets your S corp or partnership deduct fair rent for up to 14 days of genuine business use of your home each year, while you collect the rent tax-free. It requires a separate business entity, market-rate pricing backed by comparables, invoices and meeting minutes, and a hard stop at day 14. Taxagon's CPAs and EAs build Augusta rule documentation into tax planning for entity owners every year — if you'd rather not navigate it alone, reach out.
This article is general information, not tax advice for your specific situation. Tax law changes; figures are for the years stated.
Talk it through with a licensed US tax professional — we'll tell you honestly whether it applies to your situation.
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