The Augusta Rule, Section 280A(g) of the tax code, says that if you rent out your home for 14 days or fewer during the year, the rental income is completely tax free and you do not even report it. Business owners use it by legitimately renting their own home to their own business for meetings and events, at a fair market rate, with real documentation. The business deducts the rent. You keep it, untaxed.
The rule got its nickname from Augusta, Georgia. Every April, the Masters comes to town and homeowners rent their houses to golf fans for staggering sums. Congress decided decades ago that occasional home rentals like that should not drag ordinary families into landlord taxation. Fourteen days or fewer: tax free, no reporting. Then business owners read the rule carefully.
Dana owns a marketing agency taxed as an S corporation. Once a month she holds a legitimate half-day strategy meeting for her team at her home instead of renting a hotel conference room. Before the first one, she did an hour of homework: she pulled quotes from three hotels and an event space in her city for comparable meeting rooms. The going rate was $1,100 a day. She saved the screenshots.
Twelve meetings a year. A simple written rental agreement. An agenda and minutes for every session, filed. The business pays Dana $1,100 each time, from the business account.
Same meetings. Same agendas. One owner read page 280A(g).
The rules in plain English
- Fourteen days or fewer, total, for the entire year. Day fifteen does not trim the benefit; it erases it. Every rental day becomes reportable.
- Fair market rent, proven by comparables you gathered before you charged it. The deduction on the business side lives on that paper.
- A real business purpose every time: planning sessions, board meetings, client events, with an agenda and minutes in the file.
- A written rental agreement and actual payment from the business account. Money must move.
- This works for owners of S corps, C corps, and partnerships. Sole proprietors renting to their own Schedule C generally get no benefit. Ask your CPA where you land.
No employees? It still works. Here is how.
Leo runs a one-man consulting S corp. No staff, no conference table full of people. The rule does not require employees; it requires business purpose, and Leo builds his around meetings that genuinely exist. His S corp holds its documented annual meeting at his home. He runs four quarterly planning days there, each one producing a written plan. Twice a year he hosts his CPA and his attorney for strategy sessions, and twice he hosts client dinners where next year's engagements get shaped. Eight days, each with an agenda, minutes or a work product, and rent at the rate his comparables support.
Notice what Leo did not do: twelve identical "board meetings" of one person at resort pricing. That exact pattern has been shredded in Tax Court. The solo owner's version of this rule is fewer days, heavier paper, market rent. The exclusion is the same; the evidence has to work harder when the only person in most of the meetings is you.
Day fifteen erases the whole year's exclusion. Rent above fair market and the deduction unravels on both sides. No agendas, no comparables, no protection. And a sole proprietor renting to himself has built a paper loop that goes nowhere. The strategy is real; the file folder is the price.
The mistakes that get people in trouble
- Charging $5,000 a day for a meeting a hotel would host for $800. Fair market or nothing.
- Holding "meetings" with no agenda, no minutes, and no business decided.
- Losing count in December and slipping to day fifteen.
- Never actually paying. A journal entry is not rent.
Your four moves before the first meeting
- Pull three comparable venue quotes in your city and save them.
- Sign a simple rental agreement between you and the business.
- Put the meetings on the calendar, cap the year at fourteen, and keep an agenda and minutes for each.
- Pay from the business account each time, and let your CPA handle the reporting mechanics at filing.
Questions owners actually ask
Roughly $5,000 a year for meetings you were going to hold anyway. Now one question: do you own the building your business runs from, or rental property on the side? If you do, a much bigger number is hiding in it. Most owners sit on $200,000 to $450,000 per million in unclaimed deductions. You found the money on your calendar. If you own the walls, send in the engineers.
SEE YOUR BUILDING'S NUMBERFREE PROPOSAL IN 24 HOURS