Of all the strategies in the tax code, this one surprises contractors the most — because it sounds made up. It isn't. It's Section 280A(g), nicknamed the Augusta Rule after the Masters golf tournament, when Augusta homeowners rent their houses to tournament visitors.
Here's the deal: you can rent your personal residence to your business for up to 14 days per year, and the rental income is tax-free to you. The business, meanwhile, deducts the rent as an ordinary business expense.
A deduction for the business. Zero taxable income for you. Same dollars.
How does the math actually work?
Say your business holds legitimate meetings at your home — board meetings, planning retreats, training sessions, team events. You charge a documented fair-market rate of $1,500 per day (we'll get to how you prove that), for 12 days across the year.
- Business deduction: 12 days × $1,500 = $18,000
- Taxable rental income to you: $0 — because 14 or fewer rental days per year are tax-free under §280A(g)
That's $18,000 off the business's taxable income with no corresponding income on your personal return. At a 30% combined rate, that's roughly $5,400 back in your pocket.
What counts as a legitimate business use?
Real business activity at your home. Legitimate uses include:
- Annual planning or strategy retreats
- Board or shareholder meetings
- Team training sessions
- Company events or celebrations held at the house
What doesn't count: your family watching a movie in the living room and calling it a "meeting." The business purpose of each day has to be real — and documented.
How do owners mess this up?
The IRS knows this rule well. Done correctly, it's bulletproof. Done sloppily, it's an audit invitation. The three classic mistakes:
- Fantasy rent. Charging $5,000 a day for a living room that would rent for $800. The rate has to be fair-market — get comparable quotes from local venues, hotels, or short-term rentals that could host a similar meeting.
- No written agreement. You need an actual rental agreement between you and your business, just like you'd sign with any landlord.
- Blowing past 14 days. Rent for 15 days and the whole thing collapses — all the rental income becomes taxable. The 14-day limit is a cliff, not a guideline.
What's the paperwork checklist?
If you plan to use the Augusta Rule this year, put these three things in place before December 31:
- A written rental agreement between you personally and your business
- Fair-market-rate documentation — two or three comparable quotes for similar meeting space in your area
- A log of each rental day — the date, who attended, and the business purpose
And move real money: the business should actually pay you the rent, by check or transfer, on the books. A journal entry with no cash movement looks like what it is.
Is this different from the home office deduction?
Yes — and it's better. The home office deduction gives you a modest write-off for a room. The Augusta Rule lets your business pay you rent, deduct the full amount, and lets you receive up to 14 days of that rent income-free. They can even work together, but they're separate strategies with separate rules.
What does a good paper trail look like?
Vague logs lose. Specific logs win. Here's the difference:
- Weak: "Meeting at home — March."
- Strong: "March 14 — Q2 planning retreat, 9am–3pm. Attendees: Maya (owner), crew leads. Agenda: reviewed Q1 job costing, set Q2 backlog targets, planned equipment purchases. Lunch provided."
Each rental day gets a line like that: date, who was there, what business got done. Pair it with the written agreement and your comparable rate quotes, and you have a file that answers every question an examiner could ask.
One more detail: move real money. The business should actually pay you the rent — check or bank transfer, recorded on the books. A journal entry with no cash movement looks like what it is.
Does it work if you have business partners?
Yes — with each partner using their own home. The 14-day limit applies per dwelling unit, per owner. So in a two-partner company, Partner A's home can be rented to the business for up to 14 days, and Partner B's home separately for up to 14 days. Each partner needs their own agreement, their own rate documentation, and their own day log. Same rules, applied twice.
Can you do this every year?
Yes — and that's what makes it powerful. The 14-day exclusion resets every tax year. It's not a once-in-a-lifetime election or a loophole that closes after you use it. It's an annual strategy: twelve meeting days this year, twelve next year, $18,000 of deductions each year, year after year.
That repeatability is also why documentation discipline matters more than cleverness. The owners who benefit most aren't the ones with the most creative interpretation — they're the ones with the boring file: agreement on record, rate quotes saved, a day log updated the same week each meeting happens. Do it the same way every year and it becomes as routine as payroll.
Your move
Before year-end, check: did your business hold meetings, trainings, or planning sessions at your home this year? If yes, document the dates and purposes now — that record is the strategy. If the paperwork isn't in place, start it for next year: agreement, rate quotes, and a day-by-day log.
Want someone to check whether your setup would hold up — or to find the other strategies hiding in your return? Book a discovery call here.
*This article is for education only and isn't tax advice for your specific situation — talk to a qualified tax professional before implementing this strategy.*