What it is
TL;DRSection 280A(g), nicknamed the Augusta Rule after Masters-week homeowners who rent out their houses, says that if you rent your personal residence for 14 or fewer days in a year, you don't report the rental income at all. An owner whose business legitimately needs to meet at the home can have the business pay fair-market rent, deduct it, and receive it tax-free.
This is one of the cleanest small-business tax moves in the code, but only when it's done for real meetings with real business purpose, real fair-market pricing, and real documentation.
The mechanics are simple: the business holds genuine meetings (board meetings, strategy sessions, planning retreats) at the owner's home, pays a defensible daily rate, and the owner excludes up to 14 days of that rent from income.
Who it's for
Owners of S-corps, C-corps, or partnerships who genuinely conduct business meetings and have a legitimate reason to host them at a residence rather than the office.
- ✓S-corp and C-corp owners who hold real board or strategy meetings
- ✓Multi-owner businesses that meet periodically away from the office
- ✓Owners whose homes can support a defensible meeting-space rental rate
- ×Sole proprietors / single-member LLCs (you'd be renting to yourself, no deduction)
- ×Owners who would fabricate meetings just to create the deduction
- ×Anyone who can't document business purpose and fair-market pricing
How it works
1. Establish genuine business meetings
The meetings must be real: agendas, minutes, attendees, and a legitimate business reason to convene (quarterly planning, board governance, annual strategy). Documentation is what separates this from a sham.
2. Set a fair-market rental rate
Price the day the way a hotel or event venue would, get written quotes from local meeting spaces of comparable size and amenities, and keep them. A $1,500/day rate needs a $1,500/day comparable.
3. Keep the business and personal sides clean
The business writes a check to the owner (not a transfer to the same pocket informally), issues no Form 1099 to the owner-landlord for this excluded rent, and the owner keeps the 14-day-or-fewer count strictly.
Day 15 ruins everything. Rent the home to the business for 15 or more days and §280A(g) flips off entirely, all the rent becomes reportable income. The 14-day ceiling is a bright line.
4. Document and exclude
The business deducts the rent as a §162 expense. The owner excludes the income under §280A(g) and keeps the agenda, minutes, comparables, and payment records in the year-end substantiation file.
A worked example
Priya owns an S-corp marketing agency and holds 12 genuine quarterly and strategy meetings a year at her St. George home. Comparable local meeting venues quote $1,400/day. The S-corp pays her $1,400 per meeting day for 12 days.
| Meet at a rented venue | Augusta Rule at home | |
|---|---|---|
| Total rent paid | $16,800 (to a hotel) | $16,800 (to Priya) |
| Business deduction | $16,800 | $16,800 |
| Income taxable to owner | $0 | $0 (excluded) |
| Owner tax saved vs. taking it as wages (≈37%) | $0 | ≈ $6,200 |
| Tax-free cash to the owner | $16,800 |
Instead of paying a hotel, Priya's company pays her $16,800 of deductible rent that she receives completely tax-free, roughly $6,200 better than paying herself the same amount as wages, entirely because the meetings, pricing, and records are real.
Limits and risks
The 14-day limit is absolute; one extra day forfeits the entire exclusion for the year.
Pricing must be defensible. Inflated daily rates with no comparables are the fastest way to lose the deduction and invite a closer look at the rest of the return.
It doesn't work for sole proprietors or single-member LLCs, there's no separate entity to pay the rent, so it's just moving money within one taxpayer.
Examiners look for three things: did the meetings actually happen, was the rate fair-market, and was the 14-day limit respected? Agendas, minutes, written comparable quotes, and a clean payment trail make this a routine, defensible position; their absence makes it indefensible.
IRS reference
- IRC §280A(g)Income from renting a dwelling used as a residence for fewer than 15 days is excluded from gross income.
- IRC §162The business may deduct the rent if it is ordinary, necessary, and reasonable.
- Sec. 1.280A guidanceRequires the rental to be at fair market value and genuinely for business use.