What is the Augusta Rule?

The Augusta Rule refers to Section 280A(g) of the Internal Revenue Code, which allows a homeowner to rent their primary residence (or vacation home) for fewer than 15 days per year and exclude that rental income from gross income. The name comes from homeowners near Augusta National Golf Club who rented their homes during the Masters tournament. Business owners use it by having their S-corp rent their home for board meetings and similar events.

Does the Augusta Rule apply to sole proprietors?

No. A sole proprietor cannot rent their home to their own business because they are the same person — there's no separate legal entity for the rental transaction. The strategy requires an S-corp, C-corp, or partnership that is a legally separate entity from you personally.

How do you determine the fair market rent?

Get comparable quotes from local venues — hotel conference rooms, event spaces, co-working spaces — that are roughly the same size and setup as what you're providing. Keep those quotes on file. The rent your business pays should match what it would pay for a similar space. $500–$1,500/day for a home meeting space in a mid-cost area is typically defensible; $5,000/day generally is not.

What documentation do you need to make this defensible?

At minimum: a written rental agreement between you personally and your business (executed before the meeting, not after), an agenda for each meeting, an attendee list, meeting minutes or notes documenting what was discussed, and documentation of the fair market rent basis (comparable venue quotes). The IRS treats this as a potential audit trigger — the paperwork has to be there.

How much money can you actually save with the Augusta Rule?

At 14 days × a defensible daily rate (say $1,000/day), that's $14,000 of rental income excluded from your taxable income. The business deducts $14,000 as a business expense, reducing S-corp income. At a combined federal + state marginal rate of 40%, the tax savings on $14,000 is approximately $5,600/year. It's real, but it's not a large strategy — it works best as one piece of a broader plan.

Is the Augusta Rule legal?

Yes, Section 280A(g) is a legitimate provision of the tax code. The question isn't legality — it's whether the transactions are structured correctly. A genuine rental for a genuine business purpose, at a genuine market rate, with genuine documentation is fine. A paper transaction invented to move money from the S-corp to yourself without tax is not. The IRS knows the difference.

Tax strategy

The Augusta Rule: What It Is, What It Actually Requires, and How to Do It Right

Section 280A(g) lets you rent your home to your S-corp for up to 14 days per year — tax-free rental income to you, a business deduction for the entity. Here's what the rule actually requires and where owners go wrong.

Written by Matt Reese, CPA · 7 min read · Published April 2026·Share on LinkedIn

Key Takeaways

Section 280A(g) allows you to rent your home to your business for up to 14 days per year. The rental income is excluded from your taxable income. The business deducts the rent as an ordinary business expense.
This only works if the business is a separate legal entity — an S-corp or partnership. A sole proprietor cannot rent to themselves.
The rent must be at fair market value for a comparable meeting venue, not an inflated number. $5,000/day for a living room doesn't hold up.
The meetings must have a genuine business purpose — board meetings, strategy sessions, executive retreats — with documentation: agenda, attendees, minutes, and a rental agreement.
The IRS has scrutinized this strategy more in recent years. Without proper documentation, it looks like a paper transaction to move money from the business to yourself tax-free.

Social media has made this more popular — and more likely to be done wrong

The Augusta Rule became a fixture of financial social media around 2021–2022. Most of the posts skip the requirements. If you’re implementing this strategy because you saw it on Instagram, make sure you actually understand what the IRS requires before you file.

The mechanics of Section 280A(g)

Here’s the core transaction: your S-corp pays you (as a homeowner) rent to use your home for business meetings. Your S-corp deducts the rent as an ordinary business expense — reducing the income that flows to your personal return. You receive the rental income, but under Section 280A(g), if you rent your home for fewer than 15 days in a year, you don’t include that income on your personal return at all.

Net effect: $X of S-corp income becomes $X of personal rental income — but the rental income is tax-free. You’ve moved money from your business to your pocket without it being taxed as ordinary income or as a distribution.

The requirements that actually matter

Most descriptions of this strategy stop after “rent your home to your S-corp for 14 days, the income is tax-free.” Here’s what they leave out:

You must have a separate legal entity.An S-corp, multi-member LLC, or C-corp works. A sole proprietorship does not — you can’t rent to yourself.
The rent must be at fair market value. The IRS expects the business to pay the same rate it would pay for a comparable commercial venue. Get documented comp quotes from local venues before you set the rate.
There must be a genuine business purpose for each meeting.Board meetings, strategy sessions, executive retreats — activities that legitimately happen at a home or residential setting. You can’t bill the business for general office work you do at home.
You need a written rental agreement between yourself personally and your business entity, signed before the meetings take place.
Keep meeting documentation. Agenda, attendees, and notes or minutes for each meeting. This is what makes the transaction real rather than a paper transfer.
Stay under 15 days.The exclusion applies to fewer than 15 days of rental per year. At 15 days or more, the rental income becomes taxable and you’re subject to the full rental income rules.

The part that gets people in trouble

The most common failure mode is treating this as a year-end paper transaction. Owner realizes in December they want to reduce S-corp income, asks their CPA to set up a rental agreement backdated to cover earlier “meetings,” with no documentation of what was discussed.

That’s not a tax strategy. That’s a fabricated transaction that fails under audit. The strategy works when it reflects genuine business activity — and the documentation exists to prove it.

What a defensible implementation looks like

Set up the rental agreement at the start of the year. Schedule 10–14 days of board or planning meetings throughout the year — quarterly planning sessions, annual budget review, strategy retreats. Document each one with an agenda and notes. Have the S-corp pay rent via check or ACH, not just a journal entry. Keep the comparable venue quotes on file to support the rate.

Done this way, it’s a real transaction with real documentation. The strategy holds up because it reflects actual business activity.

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Frequently asked

Questions owners actually ask

What is the Augusta Rule?: The Augusta Rule refers to Section 280A(g) of the Internal Revenue Code, which allows a homeowner to rent their primary residence (or vacation home) for fewer than 15 days per year and exclude that rental income from gross income. The name comes from homeowners near Augusta National Golf Club who rented their homes during the Masters tournament. Business owners use it by having their S-corp rent their home for board meetings and similar events.
Does the Augusta Rule apply to sole proprietors?: No. A sole proprietor cannot rent their home to their own business because they are the same person — there's no separate legal entity for the rental transaction. The strategy requires an S-corp, C-corp, or partnership that is a legally separate entity from you personally.
How do you determine the fair market rent?: Get comparable quotes from local venues — hotel conference rooms, event spaces, co-working spaces — that are roughly the same size and setup as what you're providing. Keep those quotes on file. The rent your business pays should match what it would pay for a similar space. $500–$1,500/day for a home meeting space in a mid-cost area is typically defensible; $5,000/day generally is not.
What documentation do you need to make this defensible?: At minimum: a written rental agreement between you personally and your business (executed before the meeting, not after), an agenda for each meeting, an attendee list, meeting minutes or notes documenting what was discussed, and documentation of the fair market rent basis (comparable venue quotes). The IRS treats this as a potential audit trigger — the paperwork has to be there.
How much money can you actually save with the Augusta Rule?: At 14 days × a defensible daily rate (say $1,000/day), that's $14,000 of rental income excluded from your taxable income. The business deducts $14,000 as a business expense, reducing S-corp income. At a combined federal + state marginal rate of 40%, the tax savings on $14,000 is approximately $5,600/year. It's real, but it's not a large strategy — it works best as one piece of a broader plan.
Is the Augusta Rule legal?: Yes, Section 280A(g) is a legitimate provision of the tax code. The question isn't legality — it's whether the transactions are structured correctly. A genuine rental for a genuine business purpose, at a genuine market rate, with genuine documentation is fine. A paper transaction invented to move money from the S-corp to yourself without tax is not. The IRS knows the difference.

Take the next step

Turn tax questions into a plan. Talk with Matt or see how we work with operating business owners.

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Educational content only.This article is for informational purposes and does not constitute tax, legal, or investment advice. Every owner’s facts are different; consult a qualified CPA and advisor before acting. Tax and accounting services are provided through Matt Reese, CPA; investment advisory services are provided through Measured Risk Portfolios, a registered investment adviser. Matt Reese, CPA and Measured Risk Portfolios are separate entities; clients are not required to engage both.