There’s a line in the tax code that lets you collect rent from your own business, deduct it on the business side, and pay zero tax on the money personally. It’s real, it’s been on the books for decades, and most business owners have never heard of it.
It’s called the Augusta Rule — named after the Masters golf tournament, where homeowners rent out their houses for the week and pocket the cash tax-free. The technical citation is “Section 280A(g),” and here’s what it actually says: if you rent a personal residence for fewer than 15 days in a year, you don’t report the rental income at all. Not at a reduced rate. Not at all.
How the strategy works
You own a business. Your business needs to hold meetings — a board meeting, an annual planning session, a strategy day. Instead of renting a hotel conference room, you rent your own home to the business for the day. The business pays you rent and deducts it as a legitimate business expense. You receive the rent and, because you stayed under 15 days for the year, you exclude every dollar from your personal income.
Run the math. Say a defensible day rate for a meeting space in your area is $1,000. You hold 12 documented business meetings at your home over the year. The business pays you $12,000 and deducts it. You report $0. If your business is taxed as an S-corp and you’re in a combined federal-and-New-York bracket around 35%, that deduction is worth roughly $4,200 in tax you didn’t pay — on money that landed in your personal pocket completely tax-free.
That’s the whole appeal: it’s not a timing trick or a deferral. The income genuinely disappears from your return.
The four rules that keep it legitimate
This is a strategy that works beautifully when done right and falls apart instantly when done lazily. Four things have to be true.
Fourteen days, hard stop. You can rent for up to 14 days. Day 15 blows up the entire exclusion — not just the extra day, the whole thing becomes taxable. There is no rounding and no grace. Track the days.
Real fair-market rent. You can’t charge your business $5,000 for a Tuesday afternoon because you feel like it. The rate has to match what a comparable space actually rents for in your market. The clean way to prove it: get three written quotes from real venues — a hotel meeting room, an event space, an executive conference room — and set your rate at or below the middle one. Keep those quotes.
An actual business purpose. A board meeting, a quarterly planning session, a shareholder meeting — real business gets conducted. A “meeting” that’s really a family barbecue is not going to survive a second look. Annoying to document, but that’s the line between a deduction and a penalty.
You need a separate taxpayer paying the rent. This is the one that catches people. A sole proprietor cannot use the Augusta Rule, because you’d just be paying rent to yourself — the same taxpayer on both sides. You need a business entity — an S-corp, C-corp, or partnership — that’s a separate taxpayer from you personally. If you’ve been running as a sole prop, this is one more reason an entity election might pay for itself.
Document it like you’ll be audited — because you might
The Augusta Rule isn’t a red flag by itself, but a $12,000 deduction with nothing behind it is. Build the file as you go: a short rental agreement between you and the business, the three comparable quotes that justify your rate, a calendar of the dates, an agenda and minutes for each meeting, an attendee list, and a clean paper trail showing the business actually paid you (a check or transfer, not a vague journal entry). If the IRS ever asks, you hand them a folder and the conversation ends.
One nuance worth flagging: if the business pays you more than $600, you may receive a 1099 for the rent. That’s fine — you report it on Schedule E and back it out under the §280A(g) exclusion so it nets to zero. Your preparer handles that mechanically; don’t let the form scare you out of the strategy.
The Augusta Rule rewards owners who plan ahead and keep records. It punishes the ones who treat it as a slogan they saw online. Decide which one you’re going to be before December 31, because this is a current-year strategy — you can’t reach back and create meetings that didn’t happen.
Geiger Tax & Accounting is based in Amityville, NY and works with business owners nationwide. This article is general information, not tax advice for your specific situation. Section 280A(g) has strict requirements and the facts matter — talk to a professional before acting. Reach us at (631) 532-5622 or info@geigertax.com.