Augusta Rule-Potential Huge Deductions for Renting Your Residence

June 3rd, 2026 at 7:55 AM

The so-called Augusta Rule can create a valuable tax-saving opportunity for business owners who operate through an S corporation, a C corporation, or a partnership.

Under this rule, you may rent your personal residence to your business for up to 14 days per year and receive the rental income completely tax-free. At the same time, your business may deduct the rental expense as a legitimate business deduction.

So, if your corporation rents your home to hold business-related events, the corporation may deduct the fair market rental amount paid to you. At the same time, you exclude the rental income from your personal taxable income.

To use this strategy properly, documentation is critical.

If your business pays you $2,000 or more in rent during the year, the corporation generally must issue you IRS Form 1099-MISC. Even though the rental income is tax-free under the Augusta Rule, you should still report the income on your personal tax return and then offset it with a Section 280A(g) exclusion to avoid IRS matching notices.

The 14-day limit applies per residence—not per corporation. If you own multiple residences, each residence may qualify separately for up to 14 tax-free rental days annually.

You should also maintain records supporting the business purpose of each event and proof that the rent paid reflects fair market value. Comparable pricing from hotels, meeting spaces, event venues, or similar rental properties can help support the deduction.

Qualifying business uses may include board meetings, employee training sessions, strategic planning retreats, and employee appreciation events. However, entertainment-focused events or excessive personal use can jeopardize the tax deduction.

Mark S, Fineberg, CPA