The Augusta rule arrives in most people's lives through a podcast, a conference talk or a short video, usually described as a way to move money out of a business tax-free. It is a real provision of the tax code. It is also narrower than the version that circulates, and the difference between the two is almost entirely paperwork.
Quick answer: what is the Augusta rule and does it apply to me?
Internal Revenue Code section 280A(g) says that if you use a dwelling unit as a residence and rent it for fewer than 15 days in the year, you do not report the rental income and you deduct no rental expenses. Business owners apply it by having their company rent the owner's home for genuine business use. It needs a separate entity that can pay rent — an S-corp, C-corp, partnership or multi-member LLC — so a sole proprietor generally cannot use it. What makes it hold up is a real business purpose, a fair market rate evidenced before the fact, and an actual payment recorded on both sides. Estimates — confirm with your tax professional.
What the Augusta rule actually is
The statute is section 280A(g) of the Internal Revenue Code, and it is short. Where a taxpayer uses a dwelling unit as a residence during the year and rents it for fewer than 15 days, the rental income is not included in gross income and no deduction is allowed for expenses attributable to that rental. IRS Topic No. 415, Renting Residential and Vacation Property, states the same thing in plain language: there is a special rule if you use a dwelling unit as a residence and rent it for fewer than 15 days, and in that case you do not report any of the rental income and do not deduct any expenses as rental expenses.
The nickname comes from homeowners around Augusta, Georgia renting their houses out during the Masters. Nothing in the statute is about golf, tournaments or any particular city. It applies to any residence rented for fewer than 15 days.
The business-owner application layers a second step on top: rather than renting to strangers, the owner's own business entity rents the owner's home for a legitimate business use — a board meeting, a planning day, a team retreat. The entity deducts the rent as an ordinary and necessary business expense under section 162; the owner excludes the payment from income under 280A(g). Both halves have to be true independently. If the rent is not an ordinary and necessary business expense, the deduction side fails no matter how carefully the 14-day count was kept.
Who can use it — and who cannot
This is where most of the online enthusiasm meets a wall, and it is worth being blunt about it.
| Your structure | Can the arrangement work? | Why |
|---|---|---|
| S corporation | Yes | A separate taxpayer that can contract with and pay its owner. |
| C corporation | Yes | Same — a separate entity paying rent to an individual. |
| Partnership | Yes | Separate entity; watch related-party rules with your adviser. |
| Multi-member LLC | Yes | Taxed as a partnership by default, so a separate entity. |
| Sole proprietor | Generally no | There is no second party. You and the business are the same taxpayer, so there is no rental. |
| Single-member LLC (disregarded) | Generally no | Disregarded for federal tax purposes, so the same problem as a sole proprietor. |
The sole-proprietor answer is the single most common misunderstanding about this provision. You cannot rent property to yourself, because a rental needs two parties and a disregarded entity is not one. If you are weighing a structure change, LLC versus sole proprietorship covers what actually changes in your records, and the S-corp election covers that decision on its own terms. Neither is a decision to make because of this provision alone.
There is also an interaction with the home office deduction that this page will not resolve for you. The same space, on the same days, cannot be both a home office and a venue rented to your business. If you claim a home office, whether and how you can also use 280A(g) depends on facts specific to your situation — the square footage, which days, and how the space is used the rest of the year. The rules for the home office side live on is a home office tax deductible and the home office deduction calculator. The interaction itself is a question for your tax professional, and it is a real question, not a formality.
The four conditions that make it hold up
- Fewer than 15 rental days in the year. Count every rental day for that residence, not just the ones your business paid for. If you also rented the house to a family friend for a week, those days count toward the same total.
- A real business purpose for each day. Each rental day needs a business reason that would have required a venue anyway. A meeting that exists because it makes the rental possible is not a business purpose.
- A fair market rate, evidenced before the event. The rate should reflect what comparable space would cost for that day, and the evidence should be dated before the event rather than assembled afterwards. There is no IRS-published rate for this.
- The business actually pays, and both sides record it. An accrued rent that never moves, or a payment with no corresponding entry in the company's books, is the weakest version of this arrangement.
The documentation trail
This is the part that decides whether the arrangement survives questioning, and it is the part most often skipped. Per event:
- A written rental agreement between you as owner and the entity as tenant
- An agenda, and minutes or notes, showing what business was actually conducted
- An attendee list
- Comparable-rate evidence — quotes or listings for equivalent space for that day, dated before the event
- An invoice from you to the business
- Proof of payment
- The rent expense in the business's books, with the invoice attached to that entry
Where ExpenseBot fits is narrow and worth stating exactly: the invoice and the proof of payment are captured into your expense sheet with the document linked to the row, so the expense and its supporting paperwork stay together instead of drifting into separate folders over the year. ExpenseBot does not do the Augusta rule, does not decide whether it applies to you, and does not set a rate. It keeps the documents attached to the expense they justify. The general version of that idea is on the expense audit trail page, and if you are the accountant on the other side of this, the accountant workflow covers working from a client's sheet.
What goes wrong
Each of these is a documentation failure rather than a reason to avoid the provision.
Day 15. The exclusion is written as fewer than 15 days. Reaching 15 does not cost you one day of benefit — it removes the exclusion for the year, and the rental income becomes reportable.
Rates set after the fact. A rate chosen at year end, or chosen to reach a round number, has no evidence behind it. Comparable quotes gathered before the event are what turn a number into a supported number.
No minutes. Without an agenda and a record of what happened, there is nothing distinguishing a board meeting from a weekend at home. The minutes are the business purpose in written form.
A meeting of one. A single-person entity holding a single-person meeting at its owner's house is the hardest version to support, because the business need for a separate venue is hardest to show.
Mixing in home office days. Treating the same space as a home office and a rented venue at once creates a conflict rather than two deductions.
Reporting notes
On the owner's side, income excluded under 280A(g) is not reported as rental income, and no rental expenses are deducted against it. That is the whole point of the exclusion, and it is symmetric: the exclusion and the loss of the deductions come together.
The entity may still issue a Form 1099-MISC for rent it paid, depending on the amount and the reporting rules in effect for the year — the threshold for rent reporting rose to $2,000 for payments made after December 31, 2025. Whether a form is issued does not change the exclusion, but how the form and the exclusion are reconciled on the return is exactly the kind of detail to hand to a preparer rather than improvise. Our guide to who gets a 1099 and why covers the reporting side.
On the entity's side, the rent is an ordinary and necessary business expense under section 162, carried in the books with the documents above attached.
Statute and topic references verified September 6, 2026 against 26 U.S.C. section 280A(g) and IRS Topic No. 415, Renting Residential and Vacation Property.
Frequently Asked Questions
What is the Augusta rule?
It is the common name for Internal Revenue Code section 280A(g). If you use a dwelling unit as a residence and rent it out for fewer than 15 days during the year, you do not report the rental income and you do not deduct any expenses as rental expenses. Business owners apply it by having their company rent the owner's home for legitimate business use. The name comes from homeowners in Augusta renting during the Masters; the statute is not sport-specific. Estimates — confirm with your tax professional.
Can a sole proprietor use the Augusta rule?
Generally no. The arrangement requires a separate taxpayer that can pay rent to you — an S corporation, C corporation, partnership or multi-member LLC. A sole proprietor or a single-member LLC treated as a disregarded entity is not a separate taxpayer from its owner, so there is no second party to the rental. Estimates — confirm with your tax professional.
How much rent can my business pay under the Augusta rule?
A fair market rate for comparable space on that day, supported by evidence you gathered before the event rather than after it. The IRS publishes no rate for this, and the business's deduction still has to be an ordinary and necessary expense under section 162. Estimates — confirm with your tax professional.
What happens if I rent my home for 15 days?
The exclusion is written as fewer than 15 days, so at 15 days it does not apply at all — and it fails for the whole year, not just for the fifteenth day. Every rental day in the year counts toward the total, including days rented to third parties who have nothing to do with your business. Estimates — confirm with your tax professional.
What documents do I need for the Augusta rule?
Per event: a written rental agreement between you and the entity, an agenda and minutes showing the business use, an attendee list, comparable-rate evidence dated before the event, an invoice from you to the business, proof that the business actually paid, and the rent expense recorded in the business's books with the invoice attached to it.
Does the Augusta rule conflict with the home office deduction?
The same space on the same days cannot be both a rented venue and a home office, so the two interact and the interaction is fact-specific. How to handle it in your situation is a question for your tax professional — confirm with them before claiming both.
Is the Augusta rule a loophole?
It is a provision of the Internal Revenue Code, not a loophole, and it applies to anyone who rents a residence for fewer than 15 days. What draws scrutiny is not the provision but the documentation: arrangements that fail tend to fail because the business purpose, the rate evidence or the payment record was not there, rather than because the rule was unavailable. Estimates — confirm with your tax professional.
Estimates — confirm with your tax professional. This page explains what the provision says and what documenting it involves. It is not a recommendation to use it, and whether it applies to your situation is a question for your own adviser.