07/19/2026
The “Augusta Rule” is a provision in the U.S. tax code (Internal Revenue Code § 280A(g)) that lets homeowners rent out their primary residence for up to 14 days per year without having to report that rental income on their federal tax return.
How it works
Tax-free income: If you rent your home (house, condo, even a boat or mobile home used as a residence) for 14 days or fewer in a calendar year, the IRS does not require you to include that income on your tax return.
No rental deductions: In exchange for the tax-free income, you cannot deduct rental-related expenses (cleaning, advertising, platform fees, etc.) for those days.
Day 15 changes everything: If you rent for 15 days or more, all the rental income becomes taxable and you must report it and follow normal rental rules (Schedule E, expense allocation, etc.).
Why it’s associated with “rich people”?
The rule got its nickname from homeowners near Augusta National Golf Club in Georgia, who during Masters week could charge very high short-term rental rates for just a few days and keep that income tax-free. Over time, wealthy individuals and business owners realized they could adapt this beyond golf tournaments.
Common high-income uses include:
Renting a personal home to their own business (e.g., an S‑corp or LLC they own) for board meetings, strategy days, or content shoots, up to 14 days/year.
Charging a fair market rent so the business can deduct the rent expense, while the individual keeps the rental receipts tax-free.
This creates a legal “double benefit”:
Business side: rent expense reduces taxable business income.
Personal side: up to 14 days of rental income is excluded from personal taxable income.
Key compliance points
To use the Augusta Rule without triggering IRS issues, you generally need:
The property must be a dwelling unit used as your residence during the year.
Total rental period must be 14 days or fewer.
Rent must be at a fair market rate, supported by comparables (similar properties, same area, similar use).
Strong documentation:
Written rental agreement with dates, space rented, and rate.
Proof of business purpose (agendas, minutes, attendance logs) if renting to your own company.
Evidence of payment (bank transfers, checks) and actual number of rental days.
Limitations and caveats
Federal only: The rule is federal; some states do not conform to § 280A(g), so state tax treatment may differ.
Not for full-time landlords: If you already run a significant short-term rental business, the rule may not cleanly apply; you’d need a tax professional to analyze your situation.
Substance over form: The IRS looks at whether the rentals are legitimate and at market rates, not just a way to shuffle money between you and your business.
In short, the Augusta Rule is a perfectly legal code section that, when used correctly and with proper documentation, allows property owners-especially business owners with high incomes-to generate up to 14 days of tax-free rental income, often by renting their home to their own company for bona fide business use.
