The Augusta Rule: Renting Your Home to Your Business Tax-Free

Section 280A(g) of the tax code lets you rent out your personal residence for fewer than 15 days a year and leave that rent out of your income entirely. It is nicknamed the Augusta Rule because homeowners near the Augusta National golf course used it to rent to tournament visitors. It applies everywhere, to every homeowner, not just in Georgia.

For a contractor who runs an S corporation or a C corporation, that creates a legitimate planning opportunity: the company rents your home for meetings, pays you fair market rent, deducts the payment, and you report nothing.

How the 14-day rule actually works

Three things have to line up:

• You rent the dwelling for 14 days or fewer during the tax year. Day 15 destroys the exclusion for every day, not just the extra one.
• Your business is a separate legal entity that can deduct the rent. An S corp, a C corp or a multi-member partnership works. A sole proprietor or single-member LLC filing on Schedule C does not, because you would be paying rent to yourself.
• The rent is ordinary, necessary and reasonable under Section 162, and the meeting is a real business meeting.

Because the rental is excluded, you also cannot deduct any expenses against it. You do not depreciate the house or write off a share of the utilities. That is the trade.

What it is actually worth

The number depends on what comparable meeting space costs where you operate, not on what your house is worth. A contractor whose local comparable is a $400-a-day conference room and who holds twelve documented meetings a year is looking at roughly $4,800 out of the business and into their pocket without income tax on the receiving end.

That is a real benefit. It is not the $21,000 figure that circulates on social media, unless you can genuinely support four-figure daily rates for the space you are providing.

Where contractors get this wrong

In Sinopoli v. Commissioner (T.C. Memo. 2023-105), shareholders of an S corporation deducted roughly $290,900 of rent across 2015 through 2017 for meetings held at their homes. The Tax Court allowed $6,000 for 2015, $6,000 for 2016 and $4,500 for 2017. Everything else was disallowed.

Two failures did it. First, substantiation: the taxpayers could document twelve meetings in 2016 and nine in 2017, and nothing at all for 2015. Second, valuation: the IRS produced comparable local meeting space renting for about $500 for a full or half day, against claimed rent in the thousands per month. The court used the government’s comparable.

The rule survived the case. The aggressive pricing and the missing records did not.

What you need on file

• A written rental agreement between you personally and the company, signed, with dates and the daily rate.
• Evidence of fair rental value gathered before you set the rate: written quotes or screenshots from hotels, conference centers or coworking spaces in your market for comparable space and capacity. Refresh these annually.
• Proof the meeting happened and had a business purpose: an agenda, an attendee list, minutes or notes, and the decisions made. Annual planning, safety review, estimating strategy, year-end financial review and crew leadership sessions all qualify. A family dinner does not.
• A corporate resolution authorizing the arrangement.
• Rent actually paid by company check or transfer, on or near the meeting date, and recorded in the books as rent.

Your CPA will decide how the payment is reported. Some firms issue a Form 1099-MISC for rents and then report and back the amount out on Schedule E with an explanatory statement; others do not issue one at all. Either approach can be defended, but it should be a deliberate decision made once and applied consistently.

Who this fits

It fits a contractor already operating as an S corporation who holds genuine planning meetings and is willing to keep records. It does not fit someone looking for a way to move money out of the company with no underlying business activity. The size of the deduction is capped by reality: fourteen days, at a defensible rate, for meetings that actually occurred.

The short version

Fourteen days or fewer. A real entity paying real rent at a defensible rate. Written agreement, comparable quotes, agendas and minutes on file. Priced sensibly, this is a clean, durable deduction. Priced by wishful thinking, it is the case the IRS already won.

This article is general information, not tax advice for your situation. Section 280A(g) outcomes depend on your entity type, your local rental market and your documentation. Accounting Solutions LLP works with construction contractors nationwide.

Disclaimer: This content is provided for educational purposes only and is not legal, tax, accounting, or financial advice. Every situation is unique, so consult your own attorney, CPA, or financial advisor before making decisions based on this information.