The Augusta Rule: Rent Your Home Tax-Free for 14 Days
One of the few places the tax code hands you truly tax-free income: under IRC §280A(g), if you rent your home for fewer than 15 days a year, you keep the rent and never report it. It's nicknamed the "Augusta rule" after homeowners who rent to Masters Tournament visitors. It's real and it's simple — but the popular business-owner version has clear limits the Tax Court has enforced.
Table of Contents
The Rule: §280A(g)
IRC §280A(g) is short and unusually generous. If a dwelling unit you use as a residence is actually rented for less than 15 days during the year, then:
§280A(g)(1) — no deductions for that rental use are allowed, and
§280A(g)(2) — the rental income is excluded from gross income entirely.
"Less than 15 days" means a maximum of 14 rental days. At 14 or fewer, the income is tax-free; at 15+, none of it is.
You don't deduct expenses against this rental, and you don't report the income — it simply disappears from your return. The statute even says it applies "notwithstanding any other provision of this section or section 183," so it overrides the usual deduction-disallowance and hobby-loss rules.
Which Homes Qualify
The exclusion is only for a dwelling you use as a residence. Under IRC §280A(d)(1), a home counts as your residence if your personal use for the year exceeds the greater of 14 days or 10% of the days it's rented at fair value. A home you live in all year, or most second/vacation homes, clears that easily.
A pure rental property doesn't qualify. If you never personally use the home, it isn't a "residence" under §280A(d), and the §280A(g) exclusion isn't available. "Dwelling unit" is defined broadly (§280A(f)(1)) — a house, apartment, condo, mobile home, or boat can all count.
The Business-Owner Strategy
The popular version: if you own a business (often an S-corp or LLC), the business rents your home for legitimate meetings — a board meeting, a strategy offsite, an annual planning session — for 14 or fewer days a year. The business deducts the rent as an ordinary and necessary business expense under §162, and you exclude the income under §280A(g)(2).
Done right, that converts what might otherwise be a taxable distribution into a payment that's deductible to the business and tax-free to you — but only up to a reasonable, documented amount, for genuine business use. To hold up, you need all of:
A legitimate business purpose
Real meetings that genuinely serve the business — not a paper transaction.
Reasonable, documented fair-market rent
Back your rate with comparable third-party venue quotes for equivalent space. You cannot pick an arbitrary number.
Evidence the meetings happened
Dated agendas, minutes, attendees, and the business purpose for each day.
Proper paperwork
A rental agreement, proof of payment, and generally a Form 1099 from the business to you — the excluded income still leaves a paper trail.
The Limits: What the Tax Court Said
Sinopoli v. Commissioner (T.C. Memo. 2023-105)
S-corporation owners deducted $290,900 of rent paid to themselves for use of their homes over 2015–2017. The Tax Court accepted that §280A(g) can apply — but allowed only $16,500 total, setting a reasonable rate of about $500 per meeting (based on what comparable local meeting space actually rented for) and disallowing the rest as unreasonable and inadequately documented.
The lesson isn't that the strategy is invalid — it's that the number has to be defensible. An inflated rate with no comparables and no minutes is exactly what gets cut. Charge fair-market rent, document real meetings, and keep the day count at 14 or below.
Worked Example
Illustrative numbers — the daily rate is hypothetical, not a sourced figure.
Company rents the owner's home 12 days in 2026
Keep the file: the rental agreement, the three comparable quotes, dated minutes for each meeting, proof of payment, and the Form 1099. Had the owner instead charged $9,600 per meeting with no comparables, Sinopoli says the excess gets disallowed.
What Breaks It
15 or more rental days
The exclusion is gone entirely — all the rental income becomes taxable, and deductions then fall under the vacation-home rules instead.
Unreasonable rent
The excess above fair-market value is disallowed to the business (Sinopoli: $290,900 claimed → $16,500 allowed).
No documentation
No minutes, no business purpose, no comparables → the deduction is disallowed. Contemporaneous records are the whole game.
Disguised compensation
If the "rent" is really pay for your personal services, the IRS can recharacterize it as taxable wages. Keep it a genuine rental of space, tied to real meetings.
This guide is educational, not tax advice. It summarizes IRC §280A(g), (d)(1), and (f)(1) and the Tax Court's decision in Sinopoli v. Commissioner, T.C. Memo. 2023-105, as of August 2026. §280A has no dedicated IRS publication; the residence-use tests are covered in IRS Publication 527. The business-meeting strategy is legitimate but abuse-prone and fact-dependent — work with a CPA and keep thorough records.
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