At a glance
- What it is
- Your business rents your home for real business meetings, 14 days or fewer a year, at fair market rent.
- What it saves
- The business deducts the rent. You don’t report it as income.
- Best fit
- S corps, C corps, and partnerships. Not sole proprietors.
- Main catch
- The meetings must be real and the rent must match comparable local venues, with records to prove both.
- Day limit
- 14 days or fewer of rental in the year, from all renters combined.
Key takeaways
- Your business can rent your home for real meetings, 14 days or fewer a year, and under the Augusta Rule you don't report that rent.
- It fits owners of S corps, C corps, and partnerships whose homes can genuinely host meetings, not sole proprietors.
- In the illustrative example, 12 days at $1,500 a day gives an $18,000 business deduction, worth up to about $4,320 in federal income tax.
- The catch: the rent must match comparable local venues and the meetings must be real, with agendas, attendees, invoices, and rate quotes to prove it.
The numbers
Picture an S corp owner whose business holds 12 meetings a year at the owner’s home: quarterly planning sessions, an annual strategy day, and team meetings. Comparable meeting space nearby rents for $1,500 a day.
For illustration purposes. Tax law may change, which may change these calculations slightly.
| Days rented to the business | 12 |
| Fair market rent per day | $1,500 |
| Rent deducted by the business | $18,000 |
| Rent reported as income by the owner | $0 |
Because an S corp’s profit flows to the owner’s personal return, an $18,000 business deduction lowers the owner’s taxable income. At a 24% federal bracket, that is worth up to about $4,320 in federal income tax, somewhat less if the owner also claims the QBI deduction. It also lowers the owner’s Oklahoma income tax.
The rate is where most Augusta Rule deductions go wrong. $1,500 a day is only an example. Your rate has to match what comparable venues near you actually charge, and you should keep the quotes that prove it.
Could this strategy work for your business?
In a free tax analysis, your tax strategist checks whether it fits and what it could save, using your real numbers.
How it works
- Hold real business meetings at your home. Planning sessions, board or owner meetings, team training. They need a business purpose, an agenda, and attendees.
- Set a fair market rate. Get quotes from local hotels, event spaces, or meeting rooms of similar size and quality.
- Invoice the business and get paid from the business account. Treat it like any other rental: a written agreement or invoice, and payment by check or transfer.
- The business deducts the rent. As an ordinary and necessary business expense.
- You leave it off your personal return. Under §280A(g), rent for 14 days or fewer of use isn’t reported as income.
Who it fits
- Owners of S corps, C corps, and partnerships, where the business is a separate taxpayer that can pay you rent.
- Owners whose home can genuinely host meetings, with space for the people attending.
- Businesses that already hold planning sessions or team meetings and can move some of them home.
When it doesn’t work
- Sole proprietors and single-member LLCs taxed as sole proprietors. The business and the owner are the same taxpayer, so the “rent” is just paying yourself.
- Homes already rented out for more than 14 days a year, for example as a short-term rental.
- “Meetings” that are really family dinners or social events.
The rules
- 14 days or fewer. The exclusion applies only if the home is rented for fewer than 15 days in the year, counting all renters.
- It must be your residence. The home has to be a dwelling you use personally, such as your main home or a vacation home.
- Fair market rent. The business can only deduct a reasonable rate for comparable space.
- A real business purpose. The business deduction stands on its own: the meetings have to be ordinary and necessary business activity.
Risks to weigh
- Inflated rates. The Tax Court has denied these deductions when the rent wasn’t supported by comparable rates or the meetings weren’t documented.
- Thin records. Keep agendas, attendee lists, notes, invoices, rate quotes, and proof of payment for every day you claim.
- Over-claiming days. Going over 14 days of rental in a year changes the tax treatment of all the rent.
How we handle it for clients
With a Cannon & Brown tax plan, we check whether your entity qualifies, help you set and document a supportable rate, give you a simple checklist for each meeting, and make sure the rent is recorded correctly in your books and on your return. Because our technology keeps your numbers current all year, we can test this strategy against your real numbers and adjust it as your business changes.
Illustrative example. The business owner and figures on this page are hypothetical, used to explain how the strategy works. They are not a client and not a promise of results. The example assumes 12 days at $1,500 a day and a 24% federal bracket; your rate must match comparable local venues. This page is educational and is not tax advice for your situation; tax rules and limits change.
Brooks leads Cannon & Brown Tax Advisors, a forward-thinking tax firm serving business owners in Oklahoma and beyond. He builds year-round tax strategies that help business owners keep more of what they earn and reach their goals. More about Brooks
Common questions about the Augusta Rule
Can an LLC use the Augusta Rule?
It depends on how the LLC is taxed. An LLC taxed as an S corp or partnership can pay you rent, but a single-member LLC taxed as a sole proprietor can't, because the business and the owner are the same taxpayer.
How much can my business pay me in rent under the Augusta Rule?
Only fair market rent for comparable space near you. Get quotes from local hotels, event spaces, or meeting rooms of similar size and quality, and keep them, because inflated rates are where most Augusta Rule deductions go wrong.
Can I use the Augusta Rule if I also rent my home as a short-term rental?
Usually not. The exclusion applies only if the home is rented for fewer than 15 days in the year counting all renters, and going over 14 days changes the tax treatment of all the rent.
Does the Augusta Rule apply to a vacation home?
It can. The home has to be a dwelling you use personally, such as your main home or a vacation home, and the 14-day limit and fair market rent rules still apply.
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