The Augusta Rule (IRC §280A(g)): Renting Your Home for Fewer Than 15 Days
In Short
The Augusta Rule is the common name for Internal Revenue Code §280A(g), which leaves rent out of gross income when a home used as a residence is rented for fewer than 15 days in a year. It is commonly discussed by owners of corporations and partnerships that rent the owner's home for business meetings.
TL;DR
- Rent from a home used as a residence and rented for fewer than 15 days in the year is not included in gross income [1][3].
- No deduction is allowed because of the rental use, and the rent is not reported as rental income [1][4].
- A business that pays the rent deducts it only under the separate ordinary-and-necessary test of IRC §162 [2].
- Documentation — agendas, attendees, comparable rental rates and proof of payment — is central to how the arrangement holds up [5].
- The IRS warns that viral social-media “tax hacks” can lead to audits and penalties [6].
Quick Facts
| Legal Reference | IRC §280A(g) |
|---|---|
| Complexity | Medium |
| Audit Risk | Medium |
| Setup Cost | Low — mainly time and documentation |
| Time to Implement | A few hours per meeting for records and rate comparisons |
| Illustrative Example | Illustrative example, not a projection. An S corporation holds six documented planning meetings at an owner's home during the year and pays $1,000 per day, a rate supported by written quotes from comparable local venues. The corporation deducts $6,000 of rent, and the owner leaves the $6,000 out of gross income under §280A(g). Actual results depend on the facts, the documentation and the tax rates involved. |
Key Numbers & Limits
| Item | Limit or Rule | Notes |
|---|---|---|
| Rental Days Allowed | Fewer than 15 days in the tax year (14 or fewer) | Counts all rentals of the home during the year [1]. |
| Residence Test | Personal use of more than the greater of 14 days or 10% of fair-rental days | The §280A(d)(1) definition of using a unit as a residence [1]. |
| Rent Included in Gross Income | None | For the qualifying rental days [1][3]. |
| Rental Expenses Deducted | None | No deduction is allowed because of the rental use [1][4]. |
| Dollar Limit in §280A(g) | None stated in the statute | A business rent deduction still has to meet IRC §162 [2]. |
What Is the Augusta Rule?
The Augusta Rule is a nickname for section 280A(g) of the Internal Revenue Code, a special rule for renting out a home for a short time [1]. If a dwelling unit is used by the taxpayer as a residence during the year and is actually rented for fewer than 15 days, the rent is not included in gross income, and no deduction is allowed because of the rental use [1]. IRS Publication 527 describes the same rule for a home that is used as a home but rented less than 15 days [3].
The nickname comes from Augusta, Georgia, where homeowners have long rented their homes to visitors during the Masters golf tournament. The rule itself is not limited to one city or event. A dwelling unit under §280A includes a house, apartment, condominium, mobile home, boat or similar property [1].
In small-business planning, the rule is often paired with a separate question: whether a business that pays rent to use an owner's home for meetings can deduct that rent. Section 280A(g) does not grant that deduction. It depends on IRC §162, which allows ordinary and necessary expenses paid in carrying on a trade or business, including rent for property used in the business [2].
How Does the Augusta Rule Work?
- The home has to be a residence: the owner uses it personally for more than the greater of 14 days or 10% of the days it is rented at a fair rental during the year [1].
- Total rental days for the home stay under 15 for the tax year. Every rental counts toward the limit, not only rentals to a business [1][3].
- When a business rents the home, the rate is typically set at a fair rental value supported by written quotes or listings for comparable local venues, and the business purpose of each use is documented [2][5].
- The business pays the rent from its own account and records it as a rent expense on its return; the homeowner does not include the qualifying rent in gross income [1][4].
- Agendas, attendee lists, minutes, rate comparisons, invoices and proof of payment are kept for as long as they may be needed for the return [5].
The Good: What Are the Benefits of the Augusta Rule?
- Qualifying rent is excluded from the homeowner's gross income by statute, not by an IRS ruling or a private interpretation [1].
- Section 280A(g) states no dollar cap; the exclusion applies to the rent actually received for the qualifying days [1].
- Setup is usually inexpensive: the main costs are time and records rather than new entities, accounts or filings.
- It applies to any homeowner who rents a residence briefly — for example, during a local festival or sporting event — not only to business owners [3][4].
The Bad: What Are the Drawbacks of the Augusta Rule?
- No deduction is allowed because of the rental use, so costs such as cleaning or utilities tied to the rental give the homeowner no deduction [1][4].
- The 14-day ceiling covers every rental day in the year, so other short rentals of the same home can push the total past the limit and change the tax treatment [1][3].
- The business deduction is a separate test under IRC §162 and is not automatic; personal gatherings, family events or loosely described “meetings” generally do not meet the ordinary-and-necessary standard [2].
- For a sole proprietorship, or a single-member LLC that has not elected corporate treatment, the business and the owner are one taxpayer for income tax, so a payment between them is generally not a rental between two parties [8].
- The documentation work repeats for every use, every year.
The Ugly: What Are the Serious Risks of the Augusta Rule?
- If the rent is above a fair rental rate or the business purpose is not documented, the IRS can disallow the business deduction, which can bring additional tax, interest and a 20% accuracy-related penalty on the resulting underpayment [2][7].
- Because the owner controls both sides of the transaction, the IRS can examine whether the amount and terms match what unrelated parties would agree to.
- Court decisions in this area have turned on documentation: rent deductions have been denied where the business could not show the meetings took place, what business was conducted, or how the daily rate compared with similar venues.
- Social-media versions that present the rule as a way to rent your home to your business for parties, family events or 14 days “automatically” fit the IRS's warning that viral tax hacks can lead to audits, penalties or worse [6].
Who Uses the Augusta Rule?
Who It's Commonly Used By
- Owners of S corporations, C corporations or partnerships that hold occasional board, shareholder, planning or team meetings and have a home suited to them.
- Homeowners near major events — tournaments, festivals, conventions — who rent their home for a few days a year [3].
- Businesses that would otherwise pay for an outside meeting space and can document comparable local rates.
Who It's Generally Not Suited For
- Sole proprietors and single-member LLCs taxed as sole proprietorships, where the business and the owner are the same taxpayer [8].
- Homes rented 15 or more days a year, including through short-term rental platforms [1].
- Situations where the “meeting” is mainly a personal or family gathering.
- Taxpayers who are not prepared to keep meeting and rate records every year.
What Are the Key Rules & Requirements for the Augusta Rule?
- The dwelling unit must be used by the taxpayer as a residence during the year, as defined in §280A(d)(1) [1].
- The unit must be actually rented for fewer than 15 days during the tax year [1].
- Rent for those days is excluded from gross income, and no deduction is allowed because of the rental use [1].
- A business deducting the rent must show it is an ordinary and necessary expense of carrying on its trade or business [2].
- Supporting documents should show the amount paid and that it was for a business expense [5].
- Records are generally kept at least three years from filing, and longer in some situations [5].
What Are Common Mistakes & Red Flags With the Augusta Rule?
- A daily rate far above local hotel or event-space rates, with no written comparables.
- Using all 14 days every year with no agendas, minutes or attendee lists.
- Treating family dinners, holiday parties or personal events as business meetings.
- Paying the rent from a personal account, or recording a journal entry without an actual payment.
- Using the arrangement through a sole proprietorship or a single-member LLC taxed as one [8].
- Overlooking other rentals of the same home, such as a short-term rental listing, that push total rental days to 15 or more [1].
- Relying on social-media posts instead of the statute and IRS guidance [6].
Frequently Asked Questions
Is the Augusta Rule Legal?
Yes. The Augusta Rule is part of the Internal Revenue Code at section 280A(g) [1]. Whether a specific arrangement qualifies depends on the facts: the home must be a residence, rental days must stay under 15, and a business deduction for the rent must meet the separate ordinary-and-necessary test of section 162 [2].
Is Augusta Rule Rent Reported on a Tax Return?
Under §280A(g), rent from a residence rented fewer than 15 days in the year is not included in gross income, and IRS Publication 527 says not to include it in income [1][3]. A business that paid the rent reports the expense on its own return.
Does the 14-Day Limit Apply per Rental or per Year?
Per year. The rule applies when the dwelling unit is actually rented for less than 15 days during the taxable year, counting all rentals of the unit [1].
Can a Sole Proprietor Use the Augusta Rule With Their Own Business?
A sole proprietorship — and a single-member LLC that has not elected to be taxed as a corporation — is not a separate taxpayer from its owner for federal income tax [8]. A payment from that business to the owner is generally not a rental between two parties, so it does not create a business rent deduction. Rent received from unrelated renters can still fall under the 14-day rule [1].
What Records Support an Augusta Rule Rental?
Records commonly kept include a written rental agreement, meeting agendas, attendee lists and minutes, quotes or listings for comparable local venues, an invoice, and proof the business paid the rent from its own account. IRS guidance says supporting documents should show the amount paid and that it was for a business expense [5].
Sources
- 26 U.S. Code §280A — Disallowance of Certain Expenses in Connection With Business Use of Home, Rental of Vacation Homes, Etc. — Legal Information Institute, Cornell Law School
- 26 U.S. Code §162 — Trade or Business Expenses — Legal Information Institute, Cornell Law School
- Publication 527 (2025), Residential Rental Property — Internal Revenue Service
- Topic No. 415, Renting Residential and Vacation Property — Internal Revenue Service
- Publication 583, Starting a Business and Keeping Records — Internal Revenue Service
- Dirty Dozen Tax Scams for 2026 — Internal Revenue Service
- 26 U.S. Code §6662 — Imposition of Accuracy-Related Penalty on Underpayments — Legal Information Institute, Cornell Law School
- Single Member Limited Liability Companies — Internal Revenue Service
Primary sources only: the Internal Revenue Code, Treasury regulations and official agency guidance. Read how Zentavos researches these reports.