---
title: "Augusta rule: rent your home to your business | Ledgerbrook"
source: https://ledgerbrook.com/blog/augusta-rule/
description: "Augusta rule (§280A(g)) for business owners: the 14-day limit, fair rent, who qualifies, the records and the entries."
---

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# Augusta rule: rent your home to your business

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[Omkar Moraye](/about/) · November 8, 2026

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## What is the Augusta rule?

The Augusta rule, IRC §280A(g), lets you rent your home for up to 14 days a year without reporting the rent as income. When your S corp, C corp or partnership is the renter, the business deducts fair rent for real meetings, and you receive it tax-free. Sole proprietors and single-member LLCs cannot use it that way.

The Augusta rule is a line in the tax code that lets you rent out your home for up to 14 days a year and leave the rent off your return. Business owners use it by having their own company rent the house for meetings: the company deducts the rent, and the owner receives it without paying income tax on it. It is named for homeowners in Augusta, Georgia, who rent their houses to visitors during the Masters golf tournament each April.

The rule itself is short and settled. What fails in audits is everything around it: rent set at a number nobody can support, meetings with no record that they happened, and payments that look like profit moved out of the company. This post covers the statute, who can use it, how to set the rent, the records that hold up, and how the payments go into the company’s books. Ledgerbrook keeps books and does not prepare returns, so settle the plan with your CPA before the first meeting, not after the last one.

## What IRC §280A(g) says

The whole rule is one sentence in [IRC §280A(g)](https://www.law.cornell.edu/uscode/text/26/280A). If a dwelling unit “is used during the taxable year by the taxpayer as a residence” and “is actually rented for less than 15 days during the taxable year”, then no deduction is allowed because of the rental use, and “the income derived from such use for the taxable year shall not be included in the gross income of such taxpayer under section 61.”

Four details in that sentence decide most questions:

- **Fewer than 15 days, counted across every renter.** The limit is 14 days a year for the home, not 14 days per tenant. Nights rented on Airbnb, a film shoot or a tournament week all count. On the 15th day the exclusion is gone for the whole year, and the rental income becomes reportable under the normal rental rules.
- **A residence, not only a main home.** Under §280A(d)(1), you use a home as a residence if your personal use exceeds the greater of 14 days or 10% of the days it is rented at a fair price. A vacation home you stay in for more than two weeks a year qualifies. A “dwelling unit” includes “a house, apartment, condominium, mobile home, boat, or similar property” (§280A(f)(1)).
- **No dollar cap.** The statute limits days, not dollars. The real limit on the amount is that the company can only deduct rent that is reasonable, which is where audits focus (below).
- **No deductions on your side either.** You cannot deduct a share of the mortgage, utilities or cleaning against rent you are not reporting. Your mortgage interest and property taxes stay on Schedule A as usual.

IRS Publication 527 says the same thing in plain terms: if you use a dwelling unit as a home and rent it less than 15 days, “its primary function isn’t considered to be rental and it shouldn’t be reported on Schedule E (Form 1040)”, and “You aren’t required to report the rental income and rental expenses from this activity” ([IRS Publication 527](https://www.irs.gov/publications/p527), chapter 5).

That is the federal rule. State income tax does not always follow it, so ask your preparer how your state treats the rent.

## Who can use the Augusta rule with their business

The exclusion belongs to the homeowner. The deduction belongs to whoever pays the rent. The strategy only works when those are two different taxpayers, so the entity type decides it.

| How the business is taxed | Can it rent the owner’s home? | Where the rent is deducted |
| --- | --- | --- |
| S corporation, including an LLC taxed as one | Yes | Form 1120-S, line 11 (rents), which lowers the profit on the owner’s K-1 |
| C corporation | Yes | Form 1120, line 16 (rents), at the corporate rate of 21% |
| Partnership or multi-member LLC | Yes, as a payment to a partner acting other than as a partner (IRC §707(a)) | Form 1065, line 13 (rent) |
| Sole proprietorship | No | Paying rent to yourself is not a transaction, so there is nothing to deduct |
| Single-member LLC with no election | No | It is disregarded for income tax, so it is the same as a sole proprietorship |

A sole proprietor can still use §280A(g) the way Augusta homeowners do, by renting the house to an unrelated party for up to 14 days. It just cannot create a business deduction by renting to itself.

Owner rent, reimbursements and distributions all mixed into one equity account?

That is a cleanup, not a one-off fix: $99 per month of backlog (20% off 6+ months), one fixed price agreed before any work starts. [Send the file for a free 48-hour review](/contact/?from=blog%2Faugusta-rule).

## Setting a fair rent

The rent has to be what the company would pay an outsider for the same space for the same time. On the company’s side, rent is deductible under IRC §162(a)(3) only if it is ordinary, necessary and reasonable in amount, and a payment to the person who controls the company gets read closely. On the owner’s side, Publication 527 defines a fair rental price as “the amount of rent that a person who isn’t related to you would be willing to pay.”

Price the meeting, not the house. What the company is renting is a room for a group for a day, so the comparison is meeting space nearby that would hold the same number of people for the same length of time, not what the house would earn as a vacation rental and not a share of its market value. A sound file has:

- **Two or three written quotes** from hotels, conference centers or coworking spaces near you, for the same headcount and duration, saved on the date you set the rate.
- **The same services on both sides.** A hotel room rate that includes catering and projectors is not comparable to an empty living room. Adjust or pick a quote without them.
- **A rate set once, in a rental agreement,** not a figure chosen in December to reach a target deduction.

An appraisal of the home’s value as meeting space is the strongest support. In the Sinopoli case below, the court pointed to the lack of one.

## The records that hold up

The documents below appear in nearly every practitioner checklist, and the Sinopoli opinion shows what happens without them. Keep one folder per meeting:

1. **A written rental agreement** between you as homeowner and the company, signed before the first meeting, naming the rooms, the daily rate and how payment is made.
2. **The fair-rent quotes** described above, dated.
3. **An agenda, an attendee list and minutes** for each meeting. Employees, partners or outside advisers in the room are better evidence than a meeting of the owner alone.
4. **An invoice** from you to the company for each meeting, dated the meeting day.
5. **Payment from the company’s bank account to yours**, one transfer per invoice, so each payment matches one meeting.
6. **A day count for the year** covering every rental of the home, business and otherwise, that stays at 14 or below.

### What Sinopoli v. Commissioner shows

In _Sinopoli v. Commissioner_, T.C. Memo. 2023-105, three physicians owned an S corporation that ran a Planet Fitness franchise. From sometime in 2016 through September 2017 the company paid each owner $3,000 a month in rent for meetings held at their homes, and over less than three years it deducted $290,900 of rent paid to them. The court noted that the owners “have not presented any written documentation such as minutes, agendas, or calendars”, and said it seemed they had adopted a tax savings scheme to distribute the company’s earnings through purported rent payments, relying on §280A(g).

The revenue agent had found local meeting space for 500 to 1,200 people renting for about $500 for a full or half day, and allowed $500 a month for January 2016 through September 2017. The court added $6,000 for 2015 (12 meetings at $500). In all, about $16,500 of the $290,900 survived. The case turned on the company’s deduction, not on the owners’ exclusion: the rent amount had no support, and most of the meetings could not be shown to have happened.

## Recording Augusta rule rent in the books

The company’s books show rent paid to a vendor who happens to be the owner. They should not show a distribution, an owner draw or a reimbursement, because each of those has a different tax treatment and a preparer reading the general ledger will treat it accordingly.

In QuickBooks Online, set up the owner as a vendor and an expense account for the rent, then record one transaction per meeting from the company’s checking account, with the invoice, agenda and minutes attached to it:

| Account | Account type | Detail type | What it holds |
| --- | --- | --- | --- |
| Meeting Space Rent | Expenses | Rent or Lease of Buildings | Rent paid to the owner under §280A(g), one entry per meeting |

A worked example: an S corporation with an owner and four employees holds six full-day meetings at the owner’s home in 2026, an annual plan in January, four quarterly reviews and a training day. In early January the owner saved three quotes for a meeting room for ten people for a full day without catering: $1,050 at a hotel, $1,200 at a conference center and $900 at a coworking space. The rental agreement sets the rate at $1,000 a day. Each meeting is invoiced and paid the next business day:

| Date | Account | Debit | Credit |
| --- | --- | --- | --- |
| Jan 16, 2026 | Meeting Space Rent | 1,000.00 | |
| Jan 16, 2026 | Business Checking | | 1,000.00 |

The bank feed shows one $1,000 transfer to the owner per meeting, and each one matches to its entry. Across the year:

| Meeting | Date | Attendees | Rent |
| --- | --- | --- | --- |
| Annual plan | Jan 15 | Owner and 4 employees | 1,000.00 |
| Q1 review | Apr 16 | Owner and 4 employees | 1,000.00 |
| Staff training | Jun 11 | Owner, 4 employees and an outside trainer | 1,000.00 |
| Q2 review | Jul 16 | Owner and 4 employees | 1,000.00 |
| Q3 review | Oct 15 | Owner and 4 employees | 1,000.00 |
| Budget for 2027 | Dec 10 | Owner and 4 employees | 1,000.00 |
| **Total for 2026** | **6 days** | | **6,000.00** |

What the $6,000 saves is easy to overstate. The rent lowers the S corporation’s profit by $6,000, and that profit passes to the owner’s return, so at a 24% federal bracket it is worth $1,440. If the owner takes the qualified business income deduction, the lower profit also trims that deduction by up to $1,200, and the net saving falls toward $1,152. There is no payroll tax effect, because S corporation profit is not subject to it. The [S corp tax calculator](/tools/s-corp-tax-calculator/) shows where the owner’s salary and profit already stand.

### Whether the company sends a 1099-MISC

Practitioners split on this. Rent of $2,000 or more paid in the course of a business is normally reported on Form 1099-MISC, box 1, for 2026 (the threshold is explained in [the 1099 threshold for 2026](/blog/1099-threshold/)). Some preparers file the form and have the owner show the rent and back it out on the return, so the IRS’s matching program sees both sides. Others leave it off because the income is excluded by statute. Decide with your preparer before January, because a 2026 Form 1099-MISC is due to the recipient by February 1, 2027.

## The Augusta rule and a home office deduction

The two can sit side by side, but not in the same room. A home office is a space used regularly and exclusively for business. An S corporation owner-employee is reimbursed for it under an accountable plan, as covered in [accountable plan for an S corp](/blog/accountable-plan-s-corp/). Augusta rule rent is for the rest of the house on meeting days.

Two cautions. First, an office used exclusively for business is not a place for a meeting the company is also paying rent for; hold the meetings in the living areas. Second, renting the office itself to the company does not work: under §280A(c)(6), the home office rules do not apply to items attributable to renting the space to your employer while you use it as that employer’s employee. If you claim both, the plan document, the square footage and the meeting records should make it obvious which space each payment covers.

## Common questions about the Augusta rule

### How much can you write off with the Augusta rule?

There is no dollar limit in §280A(g). The company can deduct fair rent for up to 14 days of real business use, and fair rent for a meeting room is usually hundreds of dollars a day, not thousands. Six days at $1,000 is $6,000 of deduction, worth roughly $1,150 to $1,440 in federal tax for an owner in the 24% bracket.

### Is the Augusta rule a red flag?

Not the rule itself, which has been in the code since 1976. What draws attention is rent paid by a company to its own owner, at a high rate, with no records. That pattern is exactly what the IRS challenged in Sinopoli. A modest rate backed by quotes, minutes and one payment per meeting is a different file.

### Can a single-member LLC use the Augusta rule?

Not by renting to itself. A single-member LLC with no tax election is disregarded, so it and the owner are the same taxpayer. An LLC that has elected S corporation treatment can, because the S corporation is a separate taxpayer.

### Can you use the Augusta rule on a vacation home?

Yes, if your personal use of it makes it a residence under §280A(d)(1): more than the greater of 14 days or 10% of the days it is rented at a fair price. The 14-day limit then applies to that home. Rentals of the same property to anyone else count toward it.

### How do I report Augusta rule income on my tax return?

On your own return you generally do not report it: Publication 527 says rentals of a home for fewer than 15 days are not reported on Schedule E. The company deducts the rent on its return, on the rents line of Form 1120-S, Form 1120 or Form 1065. If the company issues a 1099-MISC for the rent, ask your preparer how they show it, since practice differs.

### Do you have to own your home to use the Augusta rule?

The statute speaks of a dwelling unit you use as a residence, and the guidance around it is written for owners. A tenant subletting to their own company also needs the landlord’s permission under most leases. Treat a rented home as a question for your CPA rather than a yes.

### How many days can I use the Augusta rule?

Up to 14 days in a calendar year, counted across all renters of the home. Each day the home is rented counts, so the company’s meetings and any short-term rentals share the same 14.

### Is the Augusta rule worth it?

It depends on whether the meetings are real. For a company that already holds planning meetings, training days or board meetings, moving some of them to the owner’s home for fair rent is a modest, legitimate saving. For a company of one inventing meetings to move cash, the records will not hold up and the deduction is at risk.

Questions about how to lower your taxes in general, or what triggers an audit across a whole return, are outside this post. The year-end moves that apply to most owners are in [year-end tax planning](/blog/year-end-tax-planning/).

## Books that keep the rent separate

The Augusta rule depends on the company’s books telling a clean story: rent to the owner in its own expense account, matched to dated invoices and minutes, apart from the owner’s salary and distributions. When those payments go through one equity account, or the owner pays the house costs from the company card, the preparer cannot tell rent from profit, and neither can an auditor. How owner salary and distributions are tracked is in [S-corp bookkeeping](/blog/s-corp-bookkeeping/), and what counts as a reasonable salary is in [S corp reasonable salary](/blog/s-corp-reasonable-salary/).

Ledgerbrook closes the month for S corporations in their own QuickBooks Online company, with owner wages, distributions and payments like this one each in their own accounts. Monthly bookkeeping is $149 a month for up to 3 accounts, up to 200 transactions a month.

$149per file, per month

> **When to hand this off:** if rent, reimbursements and distributions to the owner sit in one account, or the company’s 2026 books are not reconciled through the last quarter, the meeting rent cannot be shown apart from the rest. A [free file review](/contact/?from=blog%2Faugusta-rule) shows what needs separating before any price is given, and [monthly bookkeeping](/monthly-bookkeeping/) has the full scope.

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Published November 8, 2026

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