The Augusta Rule is a provision in the tax code (Section 280A(g)) that lets you rent your personal residence to your business for up to 14 days per year. The rental income is completely tax-free to you personally. Your business deducts the rental expense. You move money from your business to yourself without it being treated as ordinary income.

It is named after Augusta, Georgia, where homeowners near the Masters golf tournament rent their homes for Masters week at premium rates and pay zero tax on that income. The rule has been in the tax code since 1976 and it applies to ordinary business owners too.

How it works

Your business (S-corp, LLC taxed as S-corp, or even a separate entity you control) pays you rent to use your home for legitimate business meetings, retreats, or other business activities. The rent is a deductible business expense. The income you receive as the homeowner is excluded from your gross income on your personal return.

The limit is 14 days per year. Day 15 changes the tax treatment entirely (the income becomes taxable and you enter rental property rules). Stay at 14 days.

The math

The fair market rental rate is what a comparable venue in your area would charge for a similar use. This is important: you cannot invent a number. Document it.

Example for someone in Los Angeles

Fair market rate for home meeting space$1,500/day
Days rented to business (max 14)14 days
Total rental income (tax-free)$21,000
Business deduction (if S-corp in 24% bracket)~$5,040 tax savings

The business deducts $21,000. You receive $21,000 personally tax-free. The effective benefit is the tax on $21,000 that you do not pay (plus the deduction at the business level). In a 32% combined federal and state bracket, that is roughly $6,700 in tax savings.

What makes this legitimate

The business activity must actually occur at your home. Board meetings, strategy sessions, team retreats, executive planning meetings. The activity has to be real and documented.

Document everything:

+A written rental agreement between you and your business
+An agenda for each meeting/activity held at your home
+Comparable venue pricing documentation (Airbnb or event space rates in your area)
+Proof of payment from the business to you (actual transfers, not just entries)
+Attendee lists or minutes for meetings

Who can use this

This works best for people with an S-corp or C-corp structure where the business is a genuinely separate entity from you personally. A sole proprietor paying "rent" to themselves from the same pool of money is circular and does not achieve the same result.

To get the full benefit, you need: a business entity (S-corp or C-corp), legitimate business activities occurring at your home, fair market rental rates, and clean documentation.

This is a strategy to discuss with your CPA. It is well-established in the tax code and used by thousands of business owners. It is not a gray area when done correctly. The documentation is what keeps it clean.

The QBI interaction

If your business qualifies for the Qualified Business Income (QBI) deduction (more on that in the QBI guide), rental income from the Augusta Rule does not count as QBI income. The deduction still works, but the two strategies are separate.

Do this with your CPA

The Augusta Rule is legitimate and powerful but requires proper documentation and setup to survive scrutiny. Do not implement it without walking through the specifics with a CPA who has done it before. The structure matters.