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The Augusta Rule: How Business Owners Pocket Up to 14 Days of Tax-Free Income
- Sabih Shafi E.A
- Jul 15
- 3 min read
There's a line in the tax code — Section 280A(g) — that lets you rent your home to your own business for up to 14 days a year, deduct every dollar on the business side, and receive that money completely tax-free on your personal side. It's not a loophole or a gray area — it's been law for decades, nicknamed the "Augusta Rule" after the Masters-week homeowners in Augusta, Georgia who rented their houses tax-free.
Most business owners have never heard of it. Here's how it actually works — and how to do it without handing the IRS a reason to disallow it.
I'm Sabih Shafi, an Enrolled Agent licensed before the IRS in all 50 states. This is one of the cleanest strategies in my planning playbook for owners of S-corps and LLCs.
The mechanics, plainly
Section 280A(g) says: if you rent a home you live in for fewer than 15 days in a year, you don't report that rental income at all. Pair that with the rule that your business can deduct legitimate rent it pays, and you get a two-sided win:
Your business pays you rent for using your home — board meetings, strategy sessions, team events, client functions.
The business deducts that rent as a legitimate expense.
You receive it tax-free — because under Section 280A(g), 14 days or fewer of personal-home rental income is excluded from your return.
You've moved money out of your business and into your pocket, and neither side pays tax on it.
The numbers (illustrative)
Say your home commands a fair-market rate of $1,500/day as a meeting or event venue, and you hold 12 documented business meetings there across the year:
12 days x $1,500 = $18,000 your business pays you.
The business deducts $18,000 — at a combined ~40% rate, roughly $7,200 in tax saved on the business side.
You receive the $18,000 tax-free.
Figures are illustrative; your real number depends on a defensible market rate, your entity, and your bracket.
Where DIY-ers get it wrong — and how we do it right
The strategy is bulletproof only if it's documented like a real transaction. This is exactly where an Enrolled Agent earns the fee:
You need a real business entity (S-corp or LLC taxed as one). A pure W-2 employee can't use it.
The meetings must be legitimate — actual business purpose, not a dinner you re-labeled.
The rate must be fair-market — we document comparable venue quotes so it's defensible, not invented.
Paper it properly: written minutes, an invoice from you to the business, a rental agreement, and the payment recorded in the books.
Stay under 15 days. 14 is the ceiling; day 15 makes the entire amount taxable.
Skip the documentation and it's not a strategy — it's an audit finding. Done correctly, it's one of the most reliable tax-free shifts available to a business owner.
Frequently asked questions
Do I need an S-corp or LLC?
Yes — you need a business that can legitimately pay rent and deduct it. We confirm your entity supports it before you start.
How much can I charge?
Fair market value for your space as a venue, supported by real comparable quotes. We document the basis; we don't guess.
Is the income really tax-free?
Under Section 280A(g), rental income from your residence for fewer than 15 days a year isn't reported. The key words are documented and under 15 days.
What if I rent, not own, my home?
It can still apply to a residence you rent, but the analysis is more nuanced — we'd review your lease and situation first.
Run your number
Curious what 14 tax-free days could be worth in your situation? Run your numbers on our Tax-Savings Calculator, then let's build it correctly — meetings, rate basis, minutes and all.
Run your numbers at allstatetaxresolution.com, or book a free 15-minute planning review.
— Sabih Shafi, EA. Founder, All State Tax Resolution. Licensed before the IRS in all 50 states. Intuit QuickBooks ProAdvisor Platinum.
Educational only; not individualized tax advice. The Augusta Rule (Section 280A(g)) has specific requirements; figures are illustrative and results depend on your facts. We substantiate every strategy before implementing.
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