Rent Your Home to Your Business: The Augusta Rule Explained

Dar Mardan, CPA and Realtor, explains the Augusta Rule, the part of IRS Section 280A that lets you rent your home out for 14 days or fewer in a year without paying federal income tax on that rent. The most useful takeaway: if you own a business set up as a separate entity (not a sole proprietorship), that business may be able to rent your home for real business meetings, deduct the rent, and pay it to you tax-free, as long as the rent is at fair market value, the purpose is legitimate and everything is documented. This is general information, not tax advice; talk to your CPA before using it.

What this video covers

  • What the Augusta Rule is and where it sits in the tax code (Section 280A)
  • How any homeowner can rent their home for 14 days or fewer during big local events and keep that rent tax-free
  • Why the rule is named after Augusta, Georgia and the Masters golf tournament
  • How a business owner's company can rent the owner's home for meetings, deduct the rent and pay the owner tax-free
  • A simple example: $1,000 a day for 10 meetings, or $10,000 a year
  • The 4 rules to follow, and which business types this works best for

Key facts at a glance

  • The rule comes from IRS tax code Section 280A.
  • The limit is 14 days of rental in a year; stay within it or the rule doesn't apply.
  • Example from the video: fair rental value of $1,000 a day × 10 meetings = $10,000 of rent the business deducts and the owner may receive tax-free.
  • 4 requirements: no more than 14 days, rent at fair market value, a legitimate business purpose, and documentation (agenda, meeting records, who attended, proof of payment).
  • Best fit: owners of an S corp or C corporation that files its own tax return. It can't be a sole proprietorship.

Quick answers

Is rent from my home really tax-free if it's only for a couple of weeks? Under the Augusta Rule, if you rent out your personal residence for 14 days or less during the year, that rental income may be tax-free to you. Go even 1 day over the limit and the rule no longer covers it.

Can my S corp pay me rent to hold meetings at my house? It may, if there's a genuine business reason such as a planning meeting, board meeting, team event or client presentation. The business can deduct the rent, and you may receive it personally without paying income tax on it.

Can a sole proprietor use the Augusta Rule for business meetings? Not the business-rental part. Dar explains it can't be a sole proprietorship and works best with an S corp or C corporation that files a separate return; if you're self-employed without a formal entity, check with your advisor.

How much rent can my company pay me under the Augusta Rule? Only what your home would realistically rent for, meaning fair market value. In the video's example, a $1,000-a-day rental value for 10 meetings comes to $10,000 for the year.

What paperwork do I need to keep? Keep the meeting agenda, notes or records of what was discussed, a list of who attended, and proof the rent was actually paid. Sloppy records are the fastest way to lose the benefit.

Book a free strategy callRead the full guide →

More videos

Full transcript

There is an IRS tax rule that allows you to rent your home to your own business, get paid, legally pay 0 taxes on that income, and still write off the rent in your business as an expense. I'm not kidding you. That is real. It's called the Augusta Rule. And if you own your home and a business, you need to understand how this works, because you can benefit from it. My name is Dar Mardan. I'm a Realtor and CEO in Orange County. And in this video, I want to explain this rule to you.

So, what is the Augusta Rule? The Augusta Rule is part of the IRS tax code, Section 280A. What it says is that if you rent your personal residence for 14 days or less during the year, that rental income may be completely tax-free to you. That means if there is a big sporting event in your city, a convention, a festival, or some major celebration, and people are coming into your town looking for places to stay, you may be able to rent your home, make that money, and not pay any taxes on it, as long as you stay within the 14-day limit and follow the rules properly. And anybody can do it.

This rule became famous in Augusta, Georgia. Homeowners were renting out their homes during the Masters golf tournament. This is why people call it the Augusta Rule. Now, that by itself is a great deal, to get that rental income and not pay any taxes on it. But here's where it gets more interesting for business owners.

If you own a business, and it cannot be a sole proprietorship, your business may have a legitimate reason to rent your home. Maybe it is for a planning meeting, a strategy session, team building, board meetings, an annual Christmas party for your business, or even a client presentation. In that case, your business may be able to pay you rent for the use of your home. Then the business may be able to deduct that rent as a business expense, and you will receive that money personally tax-free. This is why this rule gets so much attention. You may have a deduction on the business side and tax-free income on the personal side.

Let me give you a simple example. Let's say the fair rental value for your home is $1,000 a day. Your business holds 10 meetings at your home during the year. Your business pays $10,000 in rent, and it writes off the $10,000 as rent expense. And if everything is done correctly, you may receive that $10,000 personally without paying any income taxes on it. That is really the basic concept. It's very simple.

Let's cover some important rules. Number 1, you notice me emphasizing it: you cannot do this more than 14 days in a year. Number 2, the rent has to be reasonable and the fair market value of your home. You can't just come up with some crazy numbers. And number 3, there has to be a legitimate business purpose. I named them previously. And number 4 is you need to have documentation. That means the agenda, records of the meeting, who attended, and proof that the rent was actually paid. This is not something you want to do sloppy. It can be done correctly and easily, and you can take advantage of it.

This is more useful for business owners that have an S corp and C corporations that file a separate tax return. If you're self-employed without a formal entity, it may not work the same way. So, you want to check with your financial advisor.

The bigger point is this: owning a home is not just having a place to live. Sometimes there are tax planning opportunities connected to homeownership that people don't even realize exist, and this is certainly one of them. It can save you, based on the value of your home, $10,000, $20,000 a year. Of course, every situation is different, and you should consult your CPA or tax advisor before implementing this strategy.

My goal is to simplify these kinds of topics so you can make better financial decisions. As I always say, let's use this information to protect you, and let's do something great together. The link to connect with me is in the description. Take care.