The Augusta Rule — Renting Your Personal Home

As a business owner, you’re always looking for smart, legal ways to reduce your tax burden. One lesser-known but powerful strategy lies in your own backyard—literally. It’s called the Augusta Rule, and it allows you to rent out your personal residence to your business for certain events, deduct the expense on your business return, and receive the rental income tax-free. When implemented properly, it’s a strategic way to shift income and create a legitimate deduction without increasing your taxable income personally.

The Basics: What Is the Augusta Rule?

The Augusta Rule (named after Augusta, Georgia) stems from IRS Code Section 280A(g), which allows homeowners to rent out their residence for up to 14 days per year without having to report the income on their tax return. The law originated due to lobbying efforts by homeowners in Augusta who rented their homes during the Masters golf tournament and wanted a way to avoid tax reporting on short-term rental income.

The rule is not just for golf fans—it can be used by business owners nationwide who want to rent their home to their own business for legitimate purposes such as:

• Company strategy sessions

• Holiday parties

• Client or staff appreciation events

• Board meetings

• Training days

The business deducts the rent as an ordinary and necessary business expense, while the homeowner enjoys completely tax-free income—up to 14 days per year.

How to Determine a Reasonable Rental Rate

You can’t just pick a number out of thin air. The rent charged must reflect fair market value—what a third party would reasonably pay to use your home for a similar event in your area. Considerations might include:

• Square footage used

• Amenities (e.g., a pool, home theater, kitchen space, or office equipment)

• Local rates for similar venues (event halls, coworking spaces, hotel meeting rooms)

• Duration and time of day

Tip: Document your research. Save screenshots or rate sheets from local venues to support the rental amount charged.

How to Stay Compliant

To make sure this strategy holds up under IRS scrutiny, documentation is essential. Treat it like a real business transaction.

Be sure to:

• Draft a rental agreement or invoice detailing the event date, purpose, and rental amount

• Make an actual payment from your business to yourself (check, ACH, or transfer—keep records!)

• Record the business purpose of the meeting or event with notes, agendas, photos, or minutes

• Maintain records of comparable venue rates to justify the amount charged

These steps will help ensure that the deduction is legitimate, and the tax-free treatment of the income is preserved.

Can I Deduct Home Expenses or Depreciation?

No. When renting your personal residence under the Augusta Rule, you:

• Do not report rental income

• Cannot deduct home-related expenses such as utilities, repairs, or depreciation

• Cannot allocate a portion of your mortgage interest or property tax to the rental use

However, your business can still deduct expenses related to the event itself—such as catering, supplies, or entertainment—just like it would if you held the meeting at a third-party venue.

An Easy Way to Create a Legitimate Business Deduction

When used properly, the Augusta Rule can be a valuable tax-saving tool. Your business benefits from a deduction, and you receive tax-free income—all while hosting meaningful company events in the comfort of your own home.

Curious about how to implement this strategy without triggering IRS red flags?
Talk to DrillDown Solution today. We’ll help you document everything properly and ensure compliance while maximizing your tax benefit.