Augusta Rule

The Augusta Rule, named after the annual golf tournament in Augusta, Georgia, allows homeowners to rent their residence to their business for up to 14 days per year without reporting the rental income. This creates a legitimate business deduction for the company while generating tax-free income for the homeowner.

This strategy is particularly effective for S-Corp owners who use their home for legitimate business purposes such as board meetings, strategic planning sessions, or client entertainment events.

Under IRC §280A(g), a taxpayer who rents their dwelling unit for fewer than 15 days during the tax year is not required to include the rental income in gross income. Simultaneously, the business that pays the rent can deduct it as an ordinary and necessary business expense under IRC §162.

• Step 1: Determine the fair market rental rate for your home
• Step 2: Document legitimate business purposes for each rental day
• Step 3: Execute a written rental agreement between yourself and your business
• Step 4: Maintain minutes and documentation for each business event
• Step 5: Process payment from the business to yourself

• Written Rental Agreement: Formal contract between homeowner and business entity
• Fair Market Value Analysis: Comparable rentals from hotels, event venues, or Airbnb
• Meeting Minutes: Documentation of what business was conducted
• Attendance Records: List of attendees and their roles
• Payment Records: Bank statements showing transfer from business to personal
• Calendar Documentation: Dates and times of each rental event

Primary Authority: IRC §280A(g) — "Rental of dwelling unit used as residence for limited time"

Supporting Authority: IRC §162 — "Trade or business expenses"

Regulations: Treas. Reg. §1.280A-1 through §1.280A-3