The Augusta Rule: Renting Your Home to Your Business for 14 Days Tax-Free (IRC 280A(g))
The “Augusta Rule” (IRC 280A(g)) is a provision that allows homeowners to rent their home for up to 14 days per year and exclude the rental income from their tax return entirely. The income is not reported, no taxes are owed, and no Schedule E filing is required. When a business owner rents their personal residence to their own business for legitimate business meetings, retreats, or events, the business deducts the rent as an expense while the owner receives the payment tax-free.
Augusta Rule mechanics:
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14-day limit. The home can be rented for up to 14 days per calendar year. Days beyond 14 trigger full rental reporting on Schedule E, and the entire rental activity is subject to normal rental income rules.
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No income reporting. The rental income received (up to 14 days) is excluded from gross income under IRC 280A(g). It doesn’t appear on the tax return.
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Business deduction. The business that pays the rent deducts it as an ordinary business expense (rent expense). The rent must be for a legitimate business purpose: board meetings, strategy sessions, team retreats, client meetings, training sessions.
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Fair market value rent. The rental rate must be the fair market value for the space in the local market. Document this by obtaining comparable rental rates for similar spaces (event venues, meeting rooms, conference centers) in the area.
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Documentation requirements:
- Written rental agreement between the homeowner and the business
- Documentation of the business purpose for each rental day
- Evidence of the fair market value rental rate (comparable venue quotes)
- Records of attendees and business agenda for each event
- Payment from the business to the homeowner by check or bank transfer (not cash)
How does this work in practice?
What are the two methods for calculating the home office deduction?
The simplified method allows $5 per square foot of your home used for business, up to 300 square feet, for a maximum deduction of $1,500. The regular method calculates actual expenses (mortgage interest or rent, property taxes, utilities, insurance, repairs, depreciation) based on the percentage of your home used exclusively and regularly for business. The regular method requires more recordkeeping but often produces a larger deduction, especially for larger office spaces or expensive homes. Under the regular method, the home office deduction cannot create a business loss, but excess deductions carry forward to the next year. Employees working from home cannot claim the home office deduction under current law (the deduction was suspended for employees by the TCJA through 2025), but self-employed individuals and independent contractors remain eligible.
What tax records should I keep and for how long?
The IRS generally requires you to keep tax records for 3 years from the date you filed the return or 2 years from the date you paid the tax, whichever is later. Keep records for 6 years if you underreported income by more than 25%, and indefinitely if you did not file a return or filed a fraudulent return. Employment tax records must be kept for at least 4 years. Property records (purchase price, improvements, depreciation) should be kept for as long as you own the asset plus the applicable retention period after disposition. Digital copies are acceptable as long as they are legible and can be reproduced if requested by the IRS.
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Yarik Yarosh, CPA. "The Augusta Rule: Renting Your Home to Your Business for 14 Days Tax-Free (IRC 280A(g))." Blue Cloud CPA, September 5, 2026. https://bluecloudcpa.com/guides/small-business-augusta-rule-section-280a
This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.