The Augusta Rule for Business Owners: How the 14-Day Home Rental Works

Augusta Rule claims rarely fail on the 14-day count. They fail on the rent. The rule itself is IRC §280A(g): if you use a home as a residence and rent it out for fewer than 15 days in a year, the rental income is excluded from your gross income and you take no rental deductions. For a business owner, the planning version is that your company rents your home for real business meetings, deducts the rent, and you receive that rent tax-free.

The formula is short:

Owner's tax-free income  = rent paid for days rented (max 14 days per year)
Company deduction        = same rent, if ordinary, necessary, and at fair rental value
Net effect               = deduction at the business level, exclusion at the personal level

The rule is legitimate and the statute is plain. The trouble comes from the company side of the transaction, which the statute doesn't protect at all.

What the statute says

IRC §280A(g) applies when a dwelling unit is used during the year by the taxpayer as a residence and is actually rented for less than 15 days during the year. In that case, no deduction attributable to the rental use is allowed, and the income from that rental use is not included in gross income.

Two definitions do the work:

• "Used as a residence." Under §280A(d)(1), you use the unit as a residence if your personal use exceeds the greater of 14 days or 10% of the days it is rented at fair rental. For a primary home, that is easy to meet.
• "Rented for less than 15 days." The count is total rental days in the year, across every renter. Fourteen days is the maximum.

The rule's nickname comes from homeowners in Augusta, Georgia, renting out their houses during the Masters. Nothing in the statute limits it to tournament weeks or to strangers.

How it works when your company is the renter

For an owner of an S corporation, partnership, or C corporation, the business is a separate taxpayer. It can rent a space for a legitimate business purpose like any other venue: a quarterly planning session, a leadership offsite, a board meeting, a client training day.

The company's side is an ordinary business deduction. That only holds if three things are true:

1. The meeting is a real business event with a business purpose, an agenda, and the people who need to be there.
2. The rent is what the company would pay a comparable venue for that space and duration.
3. The company actually pays, from its business account, against an invoice.

There is a structural limit. A sole proprietor or single-member LLC taxed as a sole proprietorship cannot rent to themselves. There is no separate payer, so there's no deduction to create.

There is also a reporting step. The 2026 Form 1099-MISC instructions set the rent reporting threshold at $2,000 or more for tax years beginning after 2025. A company paying an individual owner rent above that may have a 1099 filing obligation. The owner's preparer then handles the exclusion on the personal return. Don't skip the form because the income is excluded.

Setting a fair rent

This is where most Augusta Rule arrangements are weakest. The rent should be what a business would pay for a similar meeting space, for a similar number of hours, in the same area. It is not the nightly rate of a luxury vacation rental for the whole house.

Bennett's rule for setting it: get two or three written quotes for comparable meeting space, such as a hotel conference room, a coworking event space, or a private dining room with AV. Use the middle quote, adjust for anything the home doesn't provide, and save the quotes in the file. If the home has no meeting space better than a kitchen table, the honest answer may be that the rule doesn't fit.

The 14-day count, in practice

Most owners don't come close to 14 meeting days. A more realistic schedule is one meeting a quarter plus an annual planning session.

Watch for these:

• Other rentals count. If you list the house on a short-term rental platform for even a few days, those days count toward the 15-day line. Cross it and the exclusion is gone for all rental income that year, and the normal rental rules take over.
• A vacation home is a separate dwelling unit with its own count, but it still has to meet the residence test.
• Short rentals still count. Any day the home is rented counts toward the total, so a two-hour meeting uses up a day.

The Augusta Rule is worth a few thousand dollars a year. Owner salary, retirement funding, and entity structure are often worth more, and they come first. A Leak Check on your owner-tax setup ranks those moves for your business, so you know whether this one belongs near the top of the list or the bottom.

Illustrative math for an S corp owner

Hypothetical figures. An owner of a $4M consulting firm structured as an S corporation holds five leadership meetings a year at home. Comparable venue quotes average $1,800 per half-day session for a room that seats a dozen people with AV.

Meetings per year                         5
Rent per meeting                     $1,800
Total rent paid by the S corporation $9,000
Company deduction                    $9,000  (reduces ordinary income on the K-1)
Owner's rental income                $9,000  (excluded under §280A(g))
Federal tax effect at a 35% bracket  about $3,150

The S corporation's $9,000 deduction reduces the ordinary income passed through to the owner, and the $9,000 rent is excluded on the owner's return. The result is roughly $3,150 of federal tax at a 35% bracket, before state tax.

One adjustment most write-ups skip: if the owner takes the 20% QBI deduction, the $9,000 rent deduction also cuts qualified business income by $9,000, which trims the QBI deduction by up to $1,800. Net of that, the federal saving is closer to $2,500 (($9,000 − $1,800) × 35% = $2,520). It is useful, not life-changing.

If the owner had charged $5,000 a meeting because "that's what the house rents for during a big event," the deduction would rest on a rent no comparable venue charges for a half-day meeting. That's the version that fails.

What the Tax Court did with weak rent

Sinopoli v. Commissioner, T.C. Memo. 2023-105, is the case to read before you set a rate. An S corporation deducted $290,900 of rent paid to its owners over less than three years for meetings in their homes, and the owners excluded the rent under §280A(g). The owners had no appraisal of the space's rental value, and they had no minutes, agendas, or calendars showing the meetings happened as often as claimed. The court held that the company's deduction still had to be ordinary, necessary, and reasonable in amount under §162, allowed $500 per meeting it could confirm, and called even that figure generous because only small parts of the homes were used.

The exclusion on the owner's side was never the problem. The company's deduction was. That's why the file below matters more than the day count.

What the file needs

Treat each meeting as if an examiner will ask for it three years from now:

• Rental agreement between the company and the owner, signed before the first meeting of the year.
• Venue quotes supporting the rate.
• Agenda and attendee list for each meeting.
• Minutes or notes showing business was conducted: decisions, targets, plans.
• An invoice and payment from the company's account to the owner, dated close to the meeting.
• A calendar log of total rental days for the year, including any non-business rentals.

Our list of documentation habits that protect deductions applies here exactly.

Where it goes wrong

The patterns that weaken an Augusta Rule claim are predictable:

• Family dinners relabeled as "board meetings."
• A rent number with no comparable support.
• No payment, or a single year-end transfer that covers "all meetings."
• More than 14 total rental days because of a short-term rental listing.
• Meetings that only the owner and spouse attend, with no agenda.

The same standard applies to other owner-adjacent deductions, like combining travel with business. Our guide on writing off high-end business travel legally uses the same test: real business purpose first, then the tax benefit.

Augusta Rule vs. a home office reimbursement

Owners sometimes confuse the two. They cover different things:

Both can exist in the same home, but not for the same space on the same costs. Rent the living room for the quarterly planning day. Reimburse the office down the hall.

Does it fit your business?

Use the Augusta Rule if you already hold recurring leadership, planning, or client meetings that would otherwise happen at an outside venue, your home can genuinely host them, and you'll keep the file. Skip it if the meetings would only exist to create the deduction.

It's one small piece of a larger owner-pay plan. The bigger dollars usually sit in how you split salary and distributions, retirement funding, and entity structure. Those are the levers our fractional CFO team sets in the annual tax forecast, with the small moves added only where they pay for their paperwork. For a coaching or consulting practice, our tax strategy guide for coaches and consultants shows how the pieces fit together.

Your next step: count the meetings you actually held last year, get two venue quotes, and multiply. If the result is under $3,000 of rent, the paperwork may cost more attention than it saves. If it's larger, or you're not sure which owner-tax moves are worth doing first, bring the number to a Leak Check and get them ranked.