Real Estate Tax Calc
What the Augusta Rule is
Named for the homeowners who rent out during the Masters golf tournament, the Augusta Rule comes from Section 280A(g). If you rent a dwelling you use as a residence for fewer than 15 days during the year, you do not report the rental income at all — it is entirely tax-free.
The trade-off: because the income is excluded, you also cannot deduct rental expenses for those days. You keep your normal mortgage interest and property tax itemized deductions, but no depreciation or operating write-offs against the exempt rent.
How business owners use it
A common strategy: a business owner rents their personal home to their own company for legitimate meetings, up to 14 days a year. The company deducts the rent as a business expense, and the owner receives it tax-free under 280A(g). The rate must be reasonable — document comparable local venue pricing — and the meetings must be real, with minutes and invoices.
The 14-day line is strict
Rent for 15 days or more and the exclusion is gone entirely; all the income becomes reportable and you fall under the normal vacation-home rules. Count carefully, keep a calendar, and keep contemporaneous documentation of each rental and its business purpose.
Documenting a home-to-business rental
If you rent your home to your own company, treat it like an arm's-length transaction. Before the event, gather written quotes from comparable local venues — hotels, conference rooms, event spaces — to support your rate. Sign a short rental agreement between you and the business for each date. Keep an agenda and minutes proving a genuine business purpose, and have the company pay by check or transfer against an invoice. The company deducts the rent as an ordinary business expense; you receive it tax-free and don't report it, provided total rental days stay under 15 for the year.
Setting a defensible rent
The rent must be reasonable — what an unrelated party would charge for comparable space. Inflating the rate to shift maximum cash out of the business tax-free is the fastest way to lose an audit. Anchor the number to real comparables for a room of similar size and amenities in your area, and keep those quotes with your records. If a local hotel meeting room runs $750/day, charging your company $5,000/day for your living room is indefensible; $750 is. Reasonable and documented beats aggressive and bare every time.
What kinds of events qualify
Legitimate uses include board or shareholder meetings, strategic-planning sessions, team retreats, staff training, and client or partner meetings hosted at the home. The meeting must have a real business purpose and actually take place at the residence. A 'meeting' with no attendees, no agenda, and no output looks like a paper transaction and invites challenge. The annual meetings that corporations and LLCs are already expected to hold are a natural fit — but they still need genuine substance, real participants, and contemporaneous records.
Counting days and the 15-day line
Section 280A(g) applies only if the dwelling is rented for fewer than 15 days during the year and you also use it as a residence. Count every rental day, including days rented to third parties — for example, renting during a local event — because they all count toward the 14-day limit. Cross to 15 days and the exclusion vanishes entirely: all the rental income becomes reportable and you move into the standard vacation-home rules under Section 280A, allocating expenses between rental and personal use.
Common mistakes and audit red flags
The recurring problems are unreasonable rent with no comparables; no written agreement or invoice; 'meetings' with no agenda or minutes; the business failing to actually pay (or paying while the owner ignores the formality); and losing track of days and crossing 15. A subtler trap: the payment must be genuine rent for use of the space, not disguised wages or a distribution. Contemporaneous documentation — created at the time, not reconstructed the following spring — is the single best protection if the deduction is ever questioned.
Reporting, forms, and state considerations
Done correctly under 280A(g), you do not report the income on your personal return — there's no Schedule E entry for the exempt days. The business deducts the rent as an ordinary and necessary expense. If the business issues a Form 1099 for the payment, keep documentation showing the 280A(g) exclusion so the IRS matching program doesn't flag it as unreported income. State rules generally follow the federal treatment, but confirm your state conforms, and watch for any local lodging or occupancy taxes that can apply to short-term rentals.
Why the rule survives IRS scrutiny
Section 280A(g) is a statutory exclusion, not a loophole or a gray-area position — Congress wrote the under-15-day rule into the code. What draws IRS attention is abuse of it: unreasonable rents, sham meetings, and missing documentation, especially when a business owner pays their own home. The strategy is legitimate when the transaction is real and priced at arm's length. Treat it exactly as you would renting a hotel conference room from a stranger, and the position is defensible; treat it as a way to move cash tax-free with no substance, and it isn't.
Interaction with the home office deduction
Renting your home to your business under 280A(g) and claiming a home office deduction are separate items, but coordinate them. The home office deduction covers regular, exclusive business use of part of your home and flows on Schedule C or through your entity; the Augusta Rule covers occasional whole-home rental for meetings. Don't double-count the same space and time. Many owners use the home office for daily work and the Augusta Rule for periodic company meetings — two distinct deductions that can coexist when the facts are kept clean and separate.
A documentation checklist
For each Augusta Rule rental, keep: (1) a dated rental agreement between you and the payer; (2) comparable rate quotes from local venues supporting the price; (3) a meeting agenda and minutes or notes showing real business content and attendees; (4) an invoice from you to the business; (5) proof of payment (check or transfer); and (6) a running calendar of rental days to prove you stayed under 15 for the year. Create these contemporaneously. Reconstructed paperwork produced only after an audit notice carries far less weight.
Renting to unrelated parties
The Augusta Rule isn't limited to your own business. If you rent your residence to genuinely unrelated parties — say, a production company for a film shoot, or guests during a local festival — for fewer than 15 days total in the year, that income is likewise excluded under 280A(g). The same trade-off applies: no deductions for expenses tied to those rental days. Combine sources carefully, because all rental days across all renters count toward the single 14-day annual limit for the property.
Where to source your comparable rates
Defensible pricing starts with real market data. Pull quotes from local hotel meeting rooms, coworking and event spaces, and banquet or conference venues for a room comparable in size and amenities to the space you're renting. Screenshot the quotes with dates, or request written estimates. If your home offers genuine advantages — a large space, catering-ready kitchen, privacy — modest premiums can be justified, but anchor to the comparables. The file you build before the rental is far more persuasive than a rate you rationalize afterward.
Staying under 15 days across the whole year
The exclusion is all-or-nothing at 15 days, so track cumulatively. If you've already used the home for a few event rentals during a local festival, those days count against the same 14-day budget you might want for company meetings. Plan the year's rentals in advance and stop at 14 total days for the property. A shared calendar or simple log prevents the costly mistake of an extra rental day that retroactively makes the entire year's rental income taxable and drags you into the full vacation-home rules.
Frequently asked questions
Is Augusta Rule income really tax-free?
Yes, if you rent a personal residence fewer than 15 days in the year, Section 280A(g) excludes the income entirely — you do not even report it.
Can I deduct expenses for the rental days?
No. Because the income is excluded, expenses tied to those days are not deductible. You keep normal mortgage interest and property tax itemized deductions.
Does renting my home to my own business work?
It can, if the rent is reasonable, the meetings are legitimate and documented, and you stay under 15 days. Sloppy documentation is the main audit risk.
Can both spouses use the Augusta Rule?
The 14-day limit applies per dwelling, not per person. If you jointly own one home, you share the under-15-day limit for that property — you can't double it by having each spouse rent separately.
Does the Augusta Rule work for an S corporation or LLC?
Yes. It's commonly used with S corporations, partnerships, and multi-member LLCs. A single-member LLC taxed as a sole proprietorship is trickier, because renting to yourself lacks a separate paying entity, so the payment and deduction wash out.
How many times a year can I use it?
As many separate rentals as you like, as long as the total is 14 days or fewer for the year. You could rent one day a month for twelve months, or a single 14-day stretch — the cap is total days, not the number of events.
Can I combine the Augusta Rule with a home office deduction?
Yes, if they cover different uses. The home office deduction is for regular, exclusive business use of a portion of your home; the Augusta Rule is for occasional whole-home rental. Keep the space, time, and records separate so you're not deducting the same thing twice.
Is renting to my own business an audit magnet?
The strategy itself is legitimate under Section 280A(g). Audit risk comes from unreasonable rent, sham meetings, or missing documentation. Reasonable rates backed by comparables, real meetings with minutes, and clean invoices and payment records keep it defensible.
Sources
Educational information and estimates only. Not tax advice. Tax rules change and vary by situation; consult a qualified tax professional before acting.