The Augusta Rule: How to Rent Your Home to Your Business and Pay No Tax

The Augusta Rule: How to Rent Your Home to Your Business and Pay No Tax

There aren’t many tax strategies that allow you to receive income completely tax-free—but the Augusta Rule is one of them. Named after Augusta, Georgia—home of the Masters Golf Tournament—this IRS-approved loophole allows you to rent out your home to your business for up to 14 days per year without paying income tax on the rental payments. Used strategically, this can be a powerful way for business owners to move money out of their business and into their personal pocket—tax-free.

Here’s how it works. Under IRC Section 280A(g), if you rent out your personal residence for 14 days or fewer during the year, you are not required to report that rental income on your personal tax return. That’s right: it’s completely excluded from income. At the same time, if your business pays fair market rent for using your home for legitimate business purposes—like board meetings, strategy sessions, team retreats, or video shoots—it can deduct the rental expense as a normal business deduction.

Let’s say your business holds a monthly planning session in your living room, and you charge your business $1,000 per day for the space (as justified by comps in your area). Over 14 days, that’s $14,000 in tax-free personal income—and a $14,000 deduction to your business. No payroll tax. No self-employment tax. No income tax. Just pure savings.

But—and this is important—you have to do it right. The rental must be for a legitimate business purpose, and you must charge a reasonable market rate. You also need to document everything: meeting agendas, attendee lists, minutes, rental agreements, and payment records. Don’t just move money from one account to another without backup. That’s a recipe for trouble.

It’s also worth noting this works best if your business is an S-Corp, C-Corp, or partnership. Sole proprietors can still take advantage of it, but the strategy is cleaner and more defensible when there’s a legal separation between you and the business entity.

Talk to your CPA about how to implement the Augusta Rule in your tax plan this year. It’s one of the rare strategies where you can take a full business deduction and personally pay zero tax—if you follow the rules. Use your home wisely, and it could become one of your most comfortable tax shelters.

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