The Augusta Rule (IRC §280A(g)) is one of the most powerful – and most misunderstood – tax strategies available to S-Corp and LLC owners.
When used correctly, you can rent your home to your business for up to 14 days per year, deduct the expense on your business return, and pay zero income tax on the rental income you receive.
But the IRS knows this deduction is widely abused. Poor documentation, unreasonable pricing, or exceeding the 14-day limit creates immediate audit exposure. This guide shows you exactly how to use the Section 280A Augusta Rule correctly – with the documentation CPAs expect to see when defending the deduction.
TL;DR
- §280A(g) can allow you to rent your personal residence for up to 14 days per year with zero income tax on the rent.
- Your business can deduct the rental expense if the meetings are ordinary and necessary.
- Audit-proofing depends on documentation: agendas, notes/minutes, attendee lists documenting who participated, and a clean money trail.
- You must prove your pricing is Fair Market Value (FMV) using comparable local venues.
- Go over 14 days, charge unreasonable rates, or skip paperwork and the IRS will disallow the §280A(g) exclusion and may challenge the deduction.
What Is the Augusta Rule?
The Augusta Rule refers to §280A(g) of the Internal Revenue Code. This IRS Augusta Rule tax strategy is commonly nicknamed the “Augusta Rule” or “Masters Rule” because homeowners in Augusta, Georgia have long rented their homes during the Masters golf tournament – but the rule applies nationwide to all qualifying taxpayers.
At a high level, §280A(g) allows homeowners to rent their residence for fewer than 15 days per year without reporting the rental income.
Today, business owners use §280A(g) to rent their home to their own company for legitimate business meetings, trainings, retreats, or strategy sessions. The company deducts the rent. The homeowner receives the income excluded from income tax. When structured correctly, it’s one of the cleanest tax savings strategies available.
On this matter: List of main deductions for businesses
Who This Is For
Good fit for
- S-Corp owners who hold regular management meetings (the Augusta Rule is particularly effective for S-Corporation shareholders – the classic “Augusta Rule S-Corp” setup)
- Partnership or multi-member business owners with recurring planning sessions
- Consultants, agency owners, real estate investors, attorneys, CPAs, financial advisors, and other professional services firms with multiple stakeholders
- Owners looking for legitimate tax savings, not loopholes
Not for
Sole proprietors and single-member LLCs treated as disregarded entities.
In general, you cannot “rent” your own home to yourself as the same taxpayer and expect a rent deduction to hold up. This Augusta Rule tax strategy requires a separate taxpayer paying rent – for example, an S-Corp, C-Corp, or partnership paying rent to the homeowner.
How to Use the Augusta Rule Without Triggering an Audit
Below is the CPA-approved step-by-step method.
Step 1: Understand the 14-Day Limit
Do this: Keep total rental days at 14 or fewer per year – no exceptions.
Why it matters: The §280A(g) exclusion applies only when the residence is rented for fewer than 15 days. If you cross that threshold, the rent is no longer excluded under §280A(g). That doesn’t mean “nothing exists anymore,” but it does mean the simple tax-free treatment is gone and you shift into normal rental reporting rules.
How to do it: Maintain a dated calendar of meetings held at your residence and track rental days conservatively.
Example: If you host a monthly strategy session, cap it at 12 sessions. If you need more meetings, hold them elsewhere.
Counting Days Safely (Conservative Rule Set)
- Count calendar days, not hours. If you hold a meeting at the home on a given date, treat that date as one rental day for the 14-day limit.
- Keep a single tracker (calendar + meeting file) showing each rental day used year-to-date.
- Tie each day to documentation: agenda, notes/minutes, attendee list, and a payment reference.
- If you hold multiple sessions on the same date, document them as part of the same planned event only if they truly are. Otherwise, treat separate dates as separate rental days.
If you want audit resilience, you win by being boring and consistent.
Step 2: Prove the Business Purpose (Ordinary and Necessary)
Do this: Document why your business needed the meeting and why your home was a suitable venue.
Why it matters: Your business only gets a deduction if the expense is tied to a legitimate business purpose. The IRS will challenge deductions when the “meeting” looks vague, personal, or unsupported.
How to do it (minimum CPA-friendly documentation):
- Create a meeting agenda showing topics tied to real business decisions.
- Record brief meeting notes or minutes summarizing what was discussed and what decisions were made.
- Maintain an attendee list documenting who participated (employees, partners, contractors, vendors, advisors, board members).
- Save supporting materials that tie to the meeting topics – budget drafts, KPI reports, proposals reviewed, hiring plans, marketing calendars, etc.
Examples of defensible meeting purposes:
- Annual or quarterly planning session
- Budget review and approval
- KPI / financial performance review
- Hiring plan, compensation changes, or contractor decisions
- Vendor selection or contract review
- Pricing / service package changes
- Strategic planning for marketing, operations, or client delivery
What doesn’t qualify: A social event with incidental business talk, or a “meeting” you can’t substantiate with any contemporaneous documentation.
Step 3: Determine Fair Market Value (FMV)
Do this: Price the rental like a real venue – not imagination.
Why it matters: The IRS compares your rate to local market rates. “Reasonable” is the standard.
How to do it:
- Pull pricing from Airbnb or Vrbo listings for similar-sized homes (filter by “entire place” and “event space” if available).
- Screenshot local hotel conference room rates.
- Document Peerspace or coworking room rentals.
- Keep at least three comparable listings.
Example: If local meeting spaces run $400–$600 per day, renting your home for $500/day is defensible. Charging $5,000/day is not.
Step 4: Execute a Clean Payment Loop
Do this: Pay yourself like a real vendor.
Why it matters: No paper trail = easy disallowance. Related-party transactions get more scrutiny, so the payment trail needs to look like a normal business expense.
How to do it:
- Draft a simple rental agreement.
- Your business issues a check or traceable transfer to you personally.
- Match payment dates to meeting records.
Example: A business check with memo “§280A(g) rental – 4/12/2026 meeting.”
Step 5: Treat It Correctly on Tax Returns
Do this: Deduct the rent on your business return and exclude it from your personal return.
Why it matters: The power of §280A(g) is the double effect – deductible to the business and tax-free to you.
How to do it:
- Business return: record as “rent” or “facility rental.”
- Personal return: exclude the income entirely.
Example: No Schedule E reporting. If you report it, you lose the benefit.
Audit-Proof Augusta Rule Documentation Checklist
To avoid an IRS challenge, you need the following:
- Agendas for each meeting
- Notes or minutes that show what happened (and the outcomes)
- Attendee lists documenting meeting participants
- Lease agreement between you and your business
- Proof of FMV pricing
- Payment evidence (check copies or bank transfers)
- A day-count tracker showing you stayed at 14 days or fewer
The clearer your documentation, the less likely the IRS will scrutinize the deduction.
Common Red Flags That Trigger Audits
The 15th Day Trap (What Actually Goes Wrong)
If you hit 15+ rental days, §280A(g) no longer shelters the income. The tax-free exclusion is gone, and you move into normal rental reporting rules. If you keep treating the income as excluded anyway, you’ve created a clean audit adjustment.
Entity Structure Problems
This strategy generally depends on a separate taxpayer paying rent to the homeowner. Sole proprietors and disregarded single-member LLCs cannot create a credible “rent to myself” deduction because there is no meaningful separation.
S-Corps, C-Corps, and partnerships can pay rent to an owner, but related-party optics increase the need for clean documentation, reasonable pricing, and a clean payment trail.
Unreasonable Pricing
Charging $1,000 for a beachfront mansion? Possibly reasonable if local venue pricing supports it.
Charging $5,000 for a studio apartment? That invites a “not reasonable” adjustment and potential recharacterization.
Missing Documentation
If you can’t produce contemporaneous notes, agendas, and supporting records, the IRS may treat the meeting as not substantiated.
Sloppy Payment Trail
Cash withdrawals, commingled accounts, random transfers, or payments not matching meeting dates are common reasons the deduction collapses in audit.
Top Augusta Rule Mistakes That Invite IRS Scrutiny
- Treating the strategy as a template instead of matching it to actual business needs.
- Using a rate that isn’t supportable with local venue comparisons.
- Creating documentation after the fact instead of contemporaneously.
- Paying with messy transfers or commingling rather than a clean, traceable payment trail.
- Repeating the same “generic” meeting description with no clear business decisions or outputs.
What Happens If You Get It Wrong?
Most disputes don’t turn on whether §280A(g) exists. They turn on whether your facts look like a real business expense.
Here’s what typically happens when the facts are weak:
- Exceed 14 days: The §280A(g) exclusion is gone at 15+ days. Rent becomes taxable and shifts into normal rental reporting rules.
- FMV not supportable: The IRS may reduce the deductible rent to an amount they consider reasonable, or challenge the deduction entirely if the rate looks fabricated.
- No clear business purpose: The business deduction can be denied as not ordinary and necessary.
- Missing documents: If you can’t prove the meeting occurred as claimed, the IRS treats it as personal use.
- Related-party optics: If it looks like a disguised distribution or a way to pull profits out without a credible business expense, the IRS may recharacterize the transaction depending on the entity type and facts.
Real-world example: Sinopoli v. Commissioner (2023)
In Sinopoli v. Commissioner (T.C. Memo. 2023-105), an S-Corp deducted over $290k in rent over three years for monthly shareholder meetings held at shareholders’ homes. Commentary on the case notes the Tax Court reduced the allowable deduction dramatically because the rental rate was not supported as reasonable compared to local venue pricing and because meeting documentation was weak/incomplete.
The lesson: even with regular meetings, poor documentation and unreasonable pricing can fail in audit.
The 5-Step Formula for a Low-Risk Augusta Deduction
- Timing: Stay at 14 rental days or fewer per year.
- Purpose: Tie each day to a real business meeting with real decisions and supportable documentation.
- Documentation: Lease agreement, agendas, notes/minutes, attendee lists documenting participants, and a day-count tracker.
- Payment: Traceable business-to-personal payments that match the meeting records.
- Reporting: Deduct on the business return; exclude on the personal return.
Frequently Asked Questions About the Augusta Rule
Can I use the Augusta Rule if I’m a sole proprietor?
No. Sole proprietors and disregarded entities don’t have a separate taxpayer paying rent in a way that holds up as a rent deduction.
How many days can I rent my home under the Augusta Rule?
Up to 14 days per year. At 15+ days, the §280A(g) exclusion no longer applies.
Do I need to report Augusta Rule income on my tax return?
If you stay under 15 rental days and qualify under §280A(g), the rental income is excluded and typically is not reported as rental income.
What is a reasonable rental rate under the Augusta Rule?
A rate supported by fair market venue comparisons in your area (hotels, coworking, Airbnb, comparable event spaces). Keep documentation.
What documentation do I need to support the Augusta Rule deduction?
Agendas, notes/minutes, attendee lists, rental agreement, FMV support, payment records, and a day-count tracker.
Key Takeaway: The Augusta Rule Rewards Precision, Not Creativity
The Augusta Rule is not a “hack” or “loophole.” It’s a legitimate tax provision that requires legitimate business use. If you treat it like a tax game, the IRS will treat your deduction like a tax problem.
The audit-proof version:
- Real meetings with real business purposes
- Reasonable pricing backed by comparable venue research
- Contemporary documentation created at the time of the meeting
- Clean payment trail that matches meeting records
- Conservative approach to the 14-day limit
Do it right, and you have a powerful tax-saving strategy. Do it wrong, and you have an expensive audit adjustment.
Next Steps
If you want this deduction to withstand scrutiny, treat it like any other business expense. Apply the reasonable standard, keep documentation airtight, and don’t improvise the rules. The Augusta Rule is powerful, but it rewards precision – not creativity.
Still unsure? Work with a CPA who can structure the §280A deduction correctly and preserve your tax savings without creating unnecessary audit exposure.
