The Augusta rule, explained

What it takes to do it right

The rule is short, and so is the list of ways to lose it. Four conditions carry the position under §280A(g).

1. 01

   14 days or fewer

   The exclusion applies only if the home is rented for no more than 14 days during the year. On day 15 the rule is gone and all of the rental income becomes taxable, so the count matters.

2. 02

   It has to be your residence

   The property must be a personal residence you also use yourself, not a dedicated rental. A pure rental property is governed by the normal rental rules, not §280A(g).

3. 03

   A real rental at a fair market rate

   If you rent to your own business, the rate must be what an unrelated party would pay for comparable space, supported by quotes or comparable venue pricing. An inflated rate is the fastest way to lose the position.

4. 04

   Documented like a real transaction

   A written rental agreement, an agenda or minutes showing the business purpose of each day, an invoice, and payment from the business. The business deducts the rent; you exclude the income. Both sides need to hold together.

This is not tax advice, and the position lives or dies on the fair-market rate and the documentation. Your CPA confirms it for your business before you rely on it.

How it stacks with cost segregation

These are two different moves on two different properties. They fit together without stepping on each other.

• Different property. The Augusta rule works on your personal residence. Cost segregation works on your rental or investment property. Nothing overlaps.
• Different section. The Augusta rule is §280A(g); cost segregation runs on §168 depreciation. One excludes income, the other accelerates a deduction.
• Same year, same household. A business-owning investor can take the Augusta exclusion on the home and the accelerated depreciation on the rentals in the same year. Each is its own defensible position with its own documentation.

Common questions

What is the Augusta rule?

The Augusta rule is a provision of IRC §280A(g) that lets you rent out your personal residence for 14 days or fewer in a year and exclude that rental income from your taxable income entirely. It gets its name from the Masters in Augusta, where homeowners rent to tournament visitors. A business owner can use it to rent their own home to their business for legitimate meetings at a fair market rate, moving money from the business to themselves without it being taxable to them, provided the rental is real, priced at market, and documented.

How many days can I rent my home under the Augusta rule?

Up to 14 days in a calendar year. Rent it for 14 days or fewer and the income is excluded from your taxable income under §280A(g). Rent it for 15 days or more and the exclusion is lost entirely, so all of the rental income becomes taxable and the normal rental rules apply.

Can I rent my home to my own business under the Augusta rule?

Yes, and that is the most common use for a business owner. Your business rents your home for legitimate purposes, such as board meetings, planning sessions, or client events, at a fair market rate. The business deducts the rent as a business expense and you exclude the income personally. The key requirements are a genuine business purpose, a market rate supported by evidence, and clean documentation.

Does the Augusta rule conflict with cost segregation?

No. They apply to different properties and different parts of the code, so they stack without conflict. The Augusta rule applies to your personal residence under §280A(g). Cost segregation applies to your rental or investment property and accelerates its depreciation. A household can use both in the same year, and neither one limits the other.

What documentation does the Augusta rule require?

Treat it like a real transaction, because that is what an examiner will test it as. Keep a written rental agreement, evidence that the rate is at fair market value (quotes from comparable venues), an agenda or minutes establishing the business purpose for each day, an invoice, and a record of payment from the business. Your CPA confirms the position; the documentation is what defends it.