Real Estate
Augusta Rule: How It Saves You $2,000-$10,000 in 2026
The Augusta Rule (IRC §280A(g)) allows you to rent your personal residence for up to 14 days per year without reporting any of the rental income on your tax return. For business owners, the strategy is to rent your home to your own business for board meetings, team offsites, or client events at fair market rental rates. Your business deducts the rent as a business expense, and you receive the income tax-free.
Who Qualifies
- Own a personal residence
- Business owners who can rent their home to their company
- Anyone who rents their home for 14 days or fewer per year (event weekends, etc.)
Who does NOT qualify
- Full-time rental properties (this applies to personal residences only)
- More than 14 days of rental use per year
- Below-market-rate transactions that lack business substance
How the Math Works
Rental income: 12 × $2,500 = $30,000. Under the Augusta Rule, this income is completely excluded from your tax return. The S-corp deducts $30,000 as rent expense.
Tax benefit: $30,000 × 37% = $11,100 in tax savings (excluded income) + $30,000 business deduction reduces S-corp taxable income.
Legal Basis & IRC Citations
- IRC §280A(g): 14-day rental exclusion
- IRC §162: Business deduction for rent expense
What to Tell Your CPA
“I'd like to use the Augusta Rule to rent my home to my [S-corp/LLC] for [X] days at fair market rate of $[X]/day for business meetings. Can you confirm the rental rate is defensible, document the business purpose, and ensure we don't exceed 14 days?”
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Frequently Asked Questions
Is the Augusta Rule legal?
Yes. IRC §280A(g) is clear: rental income from your personal residence for 14 days or fewer is excluded from gross income. The IRS has not challenged this provision. The key is ensuring fair market rental rate and legitimate business purpose.
How do I determine fair market rental rate?
Get 2-3 comparable rental quotes for your area (Airbnb, VRBO, local event venues). Document the comparables. The rate should be reasonable for your home's size, location, and amenities. Don't inflate the rate.
Can I rent to my own business?
Yes, but you must document the business purpose (board meetings, strategy sessions, client events), keep meeting agendas/minutes, and charge a defensible fair market rate. The transaction must have economic substance beyond tax savings.
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