What if your business could pay you rent for using your own home—and neither you nor the IRS blinked? That’s the Augusta Rule. It’s not a gimmick. It’s in the tax code – IRS Section 280A. And if you’re not using it, you’re leaving money on the table.
This guide is for business owners doing $1–$10M in revenue, especially those in service industries like digital marketing, construction, legal, or medical. We’ll break down exactly how the Augusta Rule works, how to do it legally, and how to make sure you’re not giving away easy tax savings.
What Is the Augusta Rule?
The August Rule, lets you rent out your personal residence for up to 14 days per year without having to report that income. The rule got its nickname from homeowners in Augusta, GA, who rented out their homes during the Masters tournament. The IRS said, “Fine. If it’s under 15 days, we won’t tax it.”
Now here’s where it gets strategic: your business can rent your home for meetings. As long as it’s 14 days or fewer, the business deducts the rent, and you receive it tax-free. Legit use. Legit tax write-off. No income reported. Zero tax owed.
Why You Should Care
You’re already paying for offsite meetings, retreats, client events, etc. Why not redirect that money back to yourself instead of handing it to a hotel?
Example:
- Going rate for a decent meeting space: $1,000/day
- 10 business meetings per year at your home
- Business pays you $10,000 in rent (tax-deductible)
- You don’t report it on your tax return
- If you’re in a 40% tax bracket, that’s $4,000 you just kept
This is one of the few ways to pull money out of your business without triggering income or payroll taxes. For S-corps, LLCs, partnerships, it’s a clean, IRS-approved legitimate tax loophole.
How to Do It Right
1. Host Legit Business Events
Only real business use qualifies. Think:
- Strategic planning meetings
- Team retreats or training
- Partner or board meetings
- Client presentations or workshops
This is not a way to expense your kid’s birthday party. Be able to explain the business purpose without laughing.
Stick to 14 days, not 14 events. A 2-day retreat counts as two days.
2. Determine a Fair Rental Rate
You can’t make up numbers.
Research local hotels, coworking spaces, or venues with similar space and amenities.
- Get 2–3 quotes (use the PeerSpace platform, AirBnb for event venues and meeting rooms)
- Set a market-based daily rate ($500–$1,200 is typical)
- Document everything
Avoid inflated pricing. You want defensible numbers in case of audit.
3. Sign a Rental Agreement
Treat it like a real transaction. Have your business sign a rental agreement with you personally.
Include:
- Date, time, purpose
- Rental rate
- Signatures from both parties (yes, even if it’s “you” on both sides)
If you have a board or other partners, get it approved in your meeting minutes.
4. Document Each Meeting
This is your audit defense file. Keep:
- Agendas
- Meeting notes
- Attendee list
- Receipts for related expenses (like catering)
Optional but smart: photos or copies of handouts. Make it airtight.
5. Invoice the Business and Get Paid
Send an invoice from yourself to your business. Then have your business pay you from the company bank account. Deposit that check in your personal account.
Don’t journal it. Move the money. Keep a clear paper trail.
Classify the payment as “rent expense” in your books. Do not report it as rental income on your personal return (as long as it’s under 14 days).
6. Stay Under 14 Days
This is the hard line. Go over 14 days, and all the rental income becomes taxable. Not just the extra day—the whole thing.
And don’t try to double-dip by renting your home and claiming it as your regular home office. The IRS doesn’t like that.
Common Mistakes That Kill the Strategy
- Charging above market rates
- Missing rental agreements
- No documentation of meetings
- Mixing business and personal events
- Going over 14 days
One slip, and the whole strategy can fall apart. Don’t wing this. Run it like a real transaction.
Real-Life Example
Meet the Owner: Dr. Patel runs a growing physical therapy clinic with three partners and a team of 12. Their office is busy and space is tight—especially for full-staff meetings or private strategy sessions.
How They Use the Augusta Rule: Each quarter, the partners host a one-day strategic planning meeting at Dr. Patel’s home. Once a year, they also hold a team-wide training day there to go over compliance updates, service protocols, and growth plans.
- Agenda Highlights: Annual budget planning, operational improvements, patient care protocol updates, continuing education sessions.
- Business Purpose: To align partners on business decisions and develop the team’s clinical and customer service standards.
- Rental Details: Dr. Patel charges the business $1,000 per day. He got quotes from a local hotel ($1,200/day) and a coworking space ($900/day). $1,000 landed right in the middle and was well-documented.
- Frequency: Four quarterly meetings and one training day = five total days.
- Documentation: Rental agreements for each date. Agendas, sign-in sheets, and meeting minutes with action items are stored digitally. The business pays by check after each meeting.
Result: The clinic writes off $5,000 in rent. Dr. Patel personally receives $5,000 of tax-free income. The partners get focused time away from patients, the team gets high-quality training, and the IRS doesn’t touch a dime of that money. It’s clean, it’s smart, and it’s legal.
Augusta Rule Tax Strategy – Quick Checklist
- Event is for legitimate business purpose
- Rental rate is based on market comps
- Signed rental agreement
- Agendas, minutes, attendee list
- Invoice sent and paid
- Total use < 15 days/year
- No conflicting home office deduction
Final Thoughts
The Augusta Rule (IRS Section 280a(g)), is one of those rare IRS codes that actually works for you – it’s a legitimate tax loophole if you follow the rules. It’s a simple way to legally pay yourself tax-free, while reducing your business’s taxable income. But the IRS isn’t playing games, so treat this like a real deal.
If you’re serious about taking money off the table the smart way, set this up properly with the expert tax strategists at Bennett Financials. Get started by booking a free tax consultation today.