The Augusta Rule — Renting Your Home to Your Own Business

The rule is one sentence of statute, §280A(g): if a dwelling unit is used during the year as your residence, and you rent it for fewer than 15 days during the year, the rent is not income — you do not report it at all. It is nicknamed for the Masters tournament, where homeowners near Augusta National rent their houses out for tournament week and keep every dollar, tax-free, under exactly this sentence.

The business version: your company — typically an S corporation — rents your home for a genuine business function (the annual meeting, a board or planning session, a staff retreat) at a fair market rent, and deducts the rent as an ordinary and necessary business expense. You, the homeowner, exclude the same dollars under §280A(g), as long as all rentals of the home for the year stay at 14 days or fewer. The same rent is simultaneously a deduction on one side and excluded income on the other — which is precisely why the conditions below are policed.

The conditions are the substance, and they are all documentable: the meeting must be REAL (an agenda, minutes, and attendees — the records a genuine board keeps); the rent must be FAIR (keep written quotes from comparable local venues and short-term rentals showing what the space actually costs); and there must be a second party — a sole proprietor cannot rent to themselves, because there is nobody on the other side of the lease. Cross the line to 15 rental days and the character changes completely: the rent becomes taxable income, §280A's expense limits arrive, and the strategy is gone for that year. One more honest limit: the rule runs on a dwelling you use as your RESIDENCE — renting your business a vacation property you do not live in is a different, fully taxable transaction.