Augusta Rule (280A(g)) Without Risk: 7-Point Documentation Checklist
If you run your business through an S-Corporation, C-Corporation, or partnership, there is a powerful strategy hiding in plain sight inside the Internal Revenue Code:
You can legally rent your personal residence to your own business for up to 14 days per year, your business can deduct the rent, and you can receive that rent tax-free.
This opportunity comes from Internal Revenue Code §280A(g)—often called the Augusta Rule or Masters Rule.
Used correctly, the Augusta Rule lets you:
- Shift cash from your company to your personal bank account
- Create a legitimate business deduction for the entity
- Avoid reporting the rent as income on your individual return
Used sloppily, it becomes an audit magnet—especially if you:
- Overcharge compared to market rates
- Fail to prove that meetings were real and business-related
- Exceed the 14-day limit
This guide explains:
- What the Augusta Rule actually says (in plain English)
- Who can use it and when
- Real-world numbers
- A 7-point documentation checklist to make the strategy audit-ready
- Common mistakes and state-level nuances
- FAQs and next steps
1. What Is the Augusta Rule?
The Augusta Rule traces back to homeowners in Augusta, Georgia, who rented out their homes during the Masters Golf Tournament and lobbied for relief from complex rental rules. Congress responded with §280A(g), which creates a special rule for short-term rental of a personal residence.
Core rule (14-day rule)
If:
- A dwelling unit (house, condo, apartment, etc.) is used by you as a residence, and
- That same dwelling unit is actually rented for fewer than 15 days during the year (14 days or less),
then:
- None of the rental income is included in your gross income, and
- No rental expenses for that use are deductible on your individual return.
If you hit 15 or more rental days, the exclusion disappears: all rental income is taxable and subject to the normal vacation-home rules.
How business owners leverage it
For business owners with a separate entity, the typical play is:
- Your company (S-corp, C-corp, or partnership) rents your home for legitimate business purposes (board meetings, planning retreats, trainings, etc.).
- The company deducts reasonable rent as an ordinary and necessary business expense under §162.
- You personally exclude that rent from income under §280A(g) because the property is rented fewer than 15 days in total.
That’s the “double benefit”:
corporate deduction + tax-free rent to you, backed by clear statutory language.
2. Who Can Use the Augusta Rule (And How)?
2.1 The underlying tax rule vs. the business strategy
It is important to separate two things:
The Augusta Rule itself (IRC §280A(g)) – applies to any taxpayer who rents a dwelling unit used as a residence for fewer than 15 days in a year. This can be a primary home or a vacation property that qualifies as a “residence” under §280A(d).
The business-owner strategy – renting your home to your own company so the company deducts rent and you exclude the income.
The rule is broad; the strategic implementation is narrower.
2.2 Entity structures
For the rent-to-your-own-business strategy, you generally want a separate taxpayer:
- S-Corporation
- C-Corporation
- Partnership or multi-member LLC (taxed as a partnership)
For these, the entity and you are different taxpayers. The company can deduct rent; you can exclude it under §280A(g).
For sole proprietors and single-member LLCs taxed on Schedule C:
- You and the “business” are the same taxpayer. You cannot meaningfully rent your home “to yourself” and claim a deduction from one pocket to another.
- Many practitioners consider the Augusta-to-Schedule-C variant aggressive or lacking economic substance; mainstream guidance is to avoid this structure for the rent-to-your-business version, even though you can still use the 14-day rule for third-party rentals (for example, Masters or Super Bowl rentals).
2.3 Does it have to be your primary residence?
No. The statute requires a "dwelling unit used as a residence", not necessarily your primary residence:
- It can be your primary home, or
- A vacation home / second home that you personally use enough to meet the residence test (personal use days greater than the greater of 14 days or 10% of rental days).
Most business-owner implementations use the primary home, but that is not a statutory requirement.
2.4 Interaction with home office / principal place of business
This is one of the most misunderstood areas.
- The Code does not say you may not use §280A(g) if your home is also your principal place of business.
- However, the IRS and many advisers have cautioned against using the Augusta Rule where the same home is clearly your primary business location, especially if you already reimburse yourself as “rent” for the home office.
Practical, lower-risk approach:
- You can often combine a home office deduction and Augusta Rule if you:
- Use different areas of the home (for example, office vs. dining room / living room for board meetings), and
- Allocate use by day and space so you are not double-deducting the same room on the same day.
- Many conservative planners prefer either:
- A strong home-office strategy with accountable-plan reimbursements, or
- An Augusta strategy using occasionally rented spaces—
— rather than pushing both to the limit at once.
This is a key area to discuss with your CPA before implementation.
3. Real-World Numbers: S-Corp Example
Assume:
- You own a consulting S-corp based in Richmond, VA.
- Your home qualifies as a residence under §280A(d).
- You host 4 quarterly board meetings and 2 strategic-planning days at your home—6 total rental days.
- Comparable venue research in Richmond shows suitable hotel or coworking conference rooms at $1,200–$1,800 per day, and you settle on a defensible $1,500/day rate backed by written comparables.
Annual impact:
- Business pays you: 6 × $1,500 = $9,000
- S-corp deduction: $9,000 as rent (ordinary and necessary expense under §162, assuming legitimate business purpose and fair market rate).
- You personally: Exclude the $9,000 under §280A(g) because total rental days were under 15 and the home is used as a residence.
If your combined federal and state marginal rate is 32%, that’s roughly $2,880 in tax saved, with the cash now sitting in your personal account instead of the corporation’s.
Key constraints:
- You must keep total rental days for that property (to any renter) under 15 days.
- The rent must be reasonable—grossly inflated rates with weak documentation are at high risk.
4. The 7-Point Augusta Rule Documentation Checklist
The statute is short; the documentation burden is where owners succeed or fail.
Below is a 7-point checklist you should complete for each tax year in which you use the Augusta Rule with your business.
1) Written Rental Agreement or Corporate Resolution
You need evidence of a real, arm’s-length-style arrangement.
Options:
- A written rental agreement between you (owner) and your entity (tenant), or
- A board resolution / written consent authorizing the company to rent your home for specified business purposes at fair market rates.
Include:
- Names and addresses of both parties
- Property address
- Rental rate (per day or per event)
- Permitted business uses (board meetings, planning sessions, trainings)
- Term (for example, the calendar year)
- Signatures (you as owner and as officer/manager of the entity)
Best practice: Put this in place before the first rental day of the year.
2) Fair-Market-Value (FMV) Rate Support
The deduction on the business side lives or dies on reasonableness.
Document how you set the rate:
- Collect 3–5 comparable quotes from:
- Hotels offering meeting space
- Coworking / off-site conference venues
- Local event spaces
- Note:
- Capacity (number of attendees)
- Included amenities (Wi-Fi, A/V, parking, food)
- Whether the rate is hourly or daily
Prepare a short FMV memo explaining:
- The venues you used as comparables
- Their rates
- Why your chosen daily rate is within a normal range
Your goal is simple: if the IRS or a court looked at your rate memo, it should look boring and defensible, not aggressive or made up.
3) Calendar & Day-Count Tracking (The 14-Day Rule in Practice)
The 14-day limit is per property, per year, and applies to all rental uses, not just your own business.
Maintain:
- A calendar record (Google, Outlook, etc.) clearly labeling:
- “Augusta – Board Meeting – Day #3”
- A day-count spreadsheet with:
- Date
- Event name
- Business purpose
- “Rental Day #” and cumulative total
Remember:
- The IRS counts days, not hours—a 2-hour meeting still uses up a day.
- Once the property is rented 15 days or more, the exclusion disappears and all rental income becomes taxable for that property that year.
Practical tip: Set an internal alert when you hit 11–12 days so you do not accidentally cross the line.
4) Business Purpose: Agendas & Meeting Minutes
Every rental day should be backed by solid business-purpose documentation:
- Written agenda prepared in advance:
- Date, location, purpose
- Topics / time blocks
- Decisions you expect to make
- Attendance list:
- Names and titles of participants
- Meeting minutes:
- Summary of discussions
- Decisions made
- Action items and responsible owners
This ties directly to the “ordinary and necessary” standard for business expenses under §162—if you cannot show the meetings were real and substantive, the rent deduction is vulnerable.
5) Invoicing & Payment Trail
Treat yourself like a vendor:
Issue a formal invoice from you (homeowner) to the business:
- Invoice number and date
- Description (for example, “Rental of residential meeting space – Q2 Board Meeting”)
- Date(s) of use
- Rate and total amount
Pay from the business bank account, not personal funds:
- Check, ACH, or wire
- Pay within a normal term (for example, net 30)
Record it properly:
- On the entity’s books: “Rent – Facilities/Meetings” or similar
- On your personal side:
- If you stayed under the 14-day limit, do not report the rent as rental income; §280A(g) excludes it.
1099-MISC reporting nuance
General federal rules require businesses to issue Form 1099-MISC for rent payments ≥ $600 to individuals. Practitioners are split on how this interacts with §280A(g):
- Some advisors say no 1099 is required because the income is excluded and not reportable by the recipient.
- Others recommend a conservative approach:
- Issue a 1099-MISC to stay aligned with payer reporting rules,
- Report the 1099 amount on Schedule E, and
- Zero it out with an offsetting “§280A(g) nontaxable income” entry.
Because there is no explicit 1099 exception written into §280A(g), this is a planning choice that should be made with your CPA.
6) Annual Summary & Record Retention
At year-end, assemble an Augusta Rule file for that tax year:
- Rental agreement or board resolution
- FMV rate memo and saved comparables
- Calendar and day-count log showing total days < 15
- Agendas, attendance sheets, and minutes
- Invoices and proof of payment
- General ledger detail showing rent recorded on the business books
- Short summary sheet:
- Dates rented
- Number of days
- Total rent paid
Retention:
- Keep records for at least 7 years, especially if the rent and tax benefit are material relative to your income.
In an IRS exam, the ability to pull this single, organized file can dramatically improve your position.
7) Coordination With Other Home-Related Strategies
You may also be:
- Claiming a home office deduction (directly or via accountable plan), or
- Holding real-estate investments with their own depreciation and expense structure.
Key coordination points:
- Avoid double-dipping by deducting the same space and days under both the home-office rules and Augusta rent.
- If your home office reimbursement is booked as “rent,” that can complicate day counts and the characterization of the property; many planners instead reimburse home office via an accountable plan and reserve Augusta for a more traditional “meeting space rental” with its own documentation.
5. Common Augusta Rule Mistakes
Mistake 1: Exceeding 14 days
Even one day over 14 triggers a full loss of the exclusion for that property in that year. All rental income becomes taxable and reportable.
Mistake 2: Aggressive or unsupported rental rates
Charging $5,000/day when comparable venues are $600–$1,800/day invites scrutiny. Courts have reduced Augusta-related rent deductions where taxpayers could not justify the rate.
Mistake 3: Weak business purpose
“Holiday party,” “team social,” or “family dinner disguised as a meeting” are not strong business purposes. Stick to:
- Board and shareholder meetings
- Strategic planning
- Budget and financial review
- Training / education directly connected to your business
Mistake 4: No written agreement or resolution
Reliance on an informal understanding between “you and you” (as shareholder and individual) makes it harder to argue this is a genuine, ordinary, and necessary business expense.
Mistake 5: Treating sole proprietorships as if they were separate entities
For Schedule C businesses, you and the business are not separate taxpayers. Trying to “rent to yourself” is a red flag and often viewed as lacking substance.
Mistake 6: Sloppy coordination with home office
Claiming rent in multiple ways for the same space and days can cause the IRS to recharacterize the whole arrangement.
6. State-Level Considerations
§280A(g) is a federal rule. States vary in how closely they conform to federal law.
- Many states generally follow the federal exclusion—if rental income is excluded under §280A(g) on your federal return, it typically does not need to be reported on the corresponding state return.
- Some states have selective conformity or unique adjustments; multi-state business owners should confirm treatment with their advisor in each relevant state.
For Virginia and surrounding states (MD, DC, NC), most individual income-tax systems start from federal adjusted gross income, so properly excluded Augusta income usually does not reappear at the state level—but always confirm with your CPA.
7. Is the Augusta Rule Right for Your Business?
This strategy works best when:
- You have a separate business entity (S-corp, C-corp, partnership)
- You hold real board meetings, planning days, or trainings that reasonably require a private, reserved space
- You are willing to maintain audit-ready documentation
- Fair-market comparables support the rental rate you plan to charge
It may not be a good fit if:
- You operate only as a sole proprietor / disregarded single-member LLC and do not intend to change entity structure
- Your “meetings” would be primarily social or entertainment events
- You are unwilling to track days, agendas, minutes, and payments carefully
- Your home is your only real place of business and your recordkeeping is already strained
8. Implementation Checklist: Before, During, and After the Year
Before your first Augusta meeting
- Confirm your entity structure and eligibility with your CPA.
- Draft and sign a rental agreement or board resolution.
- Conduct FMV research and document your chosen rate.
- Set up:
- A calendar tag for Augusta events
- A day-count spreadsheet
- An invoice template and standard payment terms
For each meeting day
- Create a calendar invite labeled as an Augusta rental event.
- Prepare and distribute an agenda in advance.
- Take attendance and meeting minutes.
- Issue an invoice from you to the business.
- Pay from the business bank account and record as rent expense.
- Update your day-count log.
At year-end
- Verify that total rental days for the property are under 15.
- Assemble the annual Augusta Rule file for your tax workpapers.
- Coordinate with your CPA on:
- How the rent is reported on the entity return
- Whether any 1099-MISC will be issued and, if so, how to handle it on your individual return
9. FAQs
Q: Can I use the Augusta Rule if I also claim a home office deduction?
A: Often yes, if you clearly separate space and days. For example, you might deduct a dedicated office under the home office rules but rent your dining room and living room separately for occasional board meetings under the Augusta Rule. The key is avoiding double-counting the same area on the same day and coordinating reimbursements with your CPA.
Q: What counts as a “day” under the 14-day rule?
A: A “day” is any calendar day on which the property is rented—hours do not matter. A 2-hour morning strategy session still uses up one of your 14 allowed days.
Q: Can I use a vacation home or second home for this strategy?
A: Yes, as long as it qualifies as a dwelling unit used as a residence and you rent it for fewer than 15 days in the year.
Q: What if I accidentally exceed 14 rental days?
A: The §280A(g) exclusion no longer applies for that property that year. You must report all rental income and navigate the more complex vacation-home rules, though you may be able to deduct rental expenses subject to limitations.
Q: Can multiple businesses I own each use my home for 14 days?
A: No. The 14-day limit is per dwelling unit per year, not per business. If multiple entities rent the same home, all days count toward the same 14-day cap.
Q: Do I have to issue a 1099-MISC to myself?
A: Opinions differ. Many practitioners now favor issuing a 1099-MISC when total rent paid ≥ $600, then excluding or offsetting the income on your personal return under §280A(g); others argue that no 1099 is needed for income that is not reportable. This is a tactical decision to make with your CPA based on your risk tolerance.
10. Download: Augusta Rule 7-Point Documentation Checklist (Excel)
If you plan to use this strategy, you should not rely on memory.
Download the free Augusta Rule 7-Point Documentation Checklist (Excel)
Use it as a one-page control sheet every time your company rents your home—capturing dates, agendas, attendees, invoices, payments, and cumulative rental days so you can prove your position if the IRS ever asks.
11. Work With a CPA Who Lives in the Details
The Augusta Rule is powerful precisely because it mixes:
- A clear statutory exclusion (§280A(g))
- A standard business rent deduction (§162)
- And a heavy dose of documentation and judgment
At The RVA Accountant, we help small-business owners and real estate investors:
- Evaluate whether the Augusta Rule fits their overall tax plan
- Determine defensible fair-market rates using real local data
- Build audit-ready documentation (agreements, agendas, minutes, logs)
- Integrate Augusta with S-corp reasonable compensation, home office, cost segregation, and 1031 exchanges
If you want to fold the Augusta Rule into a broader tax strategy—not just chase one tactic in isolation—consider scheduling a planning session.
Schedule a 45-minute tax strategy consultation to discuss whether this strategy makes sense for your situation.
About The RVA Accountant
Jéron Crooks, CPA, is the founder of The RVA Accountant, PLLC, a Richmond-based firm focused on strategic tax planning and proactive advisory for small-business owners and real estate investors. Through the RVA Profit Pulse, Jéron translates complex tax rules—like the Augusta Rule—into practical, documented strategies that withstand scrutiny.
Learn more at www.thervaaccountant.com.
Disclaimer: This article is for informational and educational purposes only and does not constitute tax, legal, or financial advice. Tax outcomes depend on your specific facts and may change with future legislation or IRS guidance. Always consult a qualified professional before implementing any tax strategy, including those described here.