Augusta Rule FAQ
IRC §280A(g) is a real, powerful deduction — and one of the most hyped up strategies on social media. Here's what it actually requires, where taxpayers get it wrong, and how location and timing legitimately affect what you can deduct.
The Augusta Rule lets a homeowner rent their personal residence for fewer than 15 days per year and exclude that rental income from personal taxable income. When a business owner rents their home to their own business for legitimate business meetings, the business can deduct the rent under IRC §162 while the owner receives the income tax-free — provided the arrangement is documented, the rate is fair market, and the meetings have a real business purpose.
It can be meaningful — but the viral 'rent your house to your business for $1,500 a day, 14 days a year, tax-free' pitch oversimplifies a strategy that has very specific substantiation requirements. For some taxpayers (business owners in high-cost metros with genuine, regular business meetings) the deduction is substantial. For others (rural areas, low comparable rates, or a couple of meetings a year) the defensible deduction is much smaller. The IRS and Tax Court look closely at related-party rentals, and aggressive numbers without documentation are a frequent audit target.
Three places: (1) rent rates set far above what local comparable venues actually charge, (2) thin or missing documentation of the business meetings themselves — no agenda, no attendees, no minutes, (3) inconsistent reporting between the business return and the personal return. Sinopoli v. Commissioner (T.C. Memo 2023-105) is the leading cautionary case: shareholders rented their homes to their S corporation at rates the Tax Court found far above market, kept poor meeting records, and reported the income inconsistently. The court reduced the allowable rent to $500 per substantiated meeting — calling even that 'generous' — and disallowed the deduction entirely for meetings that weren't substantiated.
The Augusta Rule requires a fair market rental rate — what an unrelated third party would charge for a similar space in your area. A homeowner in San Francisco, Manhattan, Boston, or DC can often substantiate a much higher daily rate than a homeowner in a rural area, because comparable conference rooms, event venues, and short-term rentals in those metros genuinely cost more. This isn't unfair — it's the rule working correctly. Your defensible rate is tied to what your specific market actually charges, not a national average.
Yes — and this is one of the most overlooked planning levers. Comparable venue and short-term rental rates legitimately spike around major local events: convention weekends, sports championships, festivals, graduation weekends, holiday seasons, and (the rule's namesake) Masters week in Augusta, Georgia. If you can legitimately schedule a business meeting during a documented peak-pricing window, your fair-market comparables for that day are higher, which can justify a higher rental rate. The key word is 'legitimately' — the meeting still needs a real business purpose, real attendees, and real records. You're not inventing demand; you're aligning a real meeting with a period when your local market actually charges more.
At a minimum: (1) a written rental agreement between you and your business, (2) three or more comparable rental quotes from similar venues in your area on or near the rental date, (3) a meeting agenda and minutes for each rental day showing the business purpose, attendees, and topics, (4) proof of payment from the business to you, (5) consistent reporting on both returns — including the §280A(g) exclusion shown clearly on your personal return. This packet builder is designed to help you organize each of those.
You generally need to: own or legally control the dwelling, use it as a residence under §280A(d)(1) (personal use exceeds the greater of 14 days or 10% of days rented at fair value), rent it fewer than 15 days during the tax year, have a real business that pays the rent for an ordinary and necessary business purpose under §162, and price the rental at fair market value. Pure investment or rental properties don't qualify, and the 15-day cliff is absolute — rent 15 days and the entire exclusion is lost.
Possibly, but carefully. They cover different uses of the home and the documentation needs to make that clear so there's no double-dip. This is a question to walk through with your tax professional before filing.
It helps you organize the documentation: rental dates, comparable research, agendas, payment records, and a packet you can hand to your tax professional. It does not calculate, recommend, approve, or guarantee a rental rate. It does not determine whether you qualify, file your return, or guarantee IRS acceptance. Always review the packet with a qualified tax professional before relying on it.
The Augusta Rule Packet Builder walks you through the substantiation step-by-step: qualification questions, rental dates, comparable research, meeting agendas, and a tax-professional-ready packet.
This tool is for educational and organizational purposes only. It does not provide tax, legal, or accounting advice. It does not calculate, recommend, approve, or guarantee a rental rate. It does not guarantee tax savings or IRS acceptance. Review your situation and all generated documents with a qualified tax professional.