Is the Augusta Rule Legit? Renting Your Home to Your Business, Without the TikTok Version

What does the Augusta Rule actually say?

The Augusta Rule is the nickname for section 280A(g), after homeowners in Augusta, Georgia who rent out their houses during the Masters. If a dwelling unit is used by the taxpayer as a residence during the year and is actually rented for less than 15 days, no deduction is allowed because of the rental use, and the rental income isn’t included in gross income.¹

Three details matter more than the videos suggest:

• The 14 days are a total. The statute counts the days the home is actually rented during the year, whoever the renter is. If you also rent the home on a short-term rental platform, those days count toward the same limit.¹
• It has to be a residence. Your personal use, which includes use by family members, must exceed the greater of 14 days or 10% of the days rented at a fair rental.¹
• Fifteen days changes everything. At 15 or more rental days, the rental income becomes reportable.⁵

The half TikTok skips: your company’s deduction

Section 280A(g) protects the homeowner. It says nothing about the payer. When the payer is your own corporation or partnership, its deduction for the rent has to qualify under section 162 as an ordinary and necessary expense paid or incurred during the year for a genuine business use.² Because the landlord and the tenant are effectively the same people, the Tax Court applies that reasonableness test with particular care in related-party dealings.³

Sinopoli v. Commissioner (2023)

The owners of an S corporation that ran fitness franchises held company meetings in their homes and had the company pay them rent: $96,400 for 2015, $113,500 for 2016 and $81,000 for 2017, a total of $290,900. The rate was based on $1.83 per square foot of common area. There was no appraisal of the homes as meeting space and no minutes, agendas or calendars showing that all the claimed meetings occurred; the IRS allowed only meetings backed by notes of an actual meeting. Other family members were home during some meetings. The IRS examiner found local meeting space, sized for groups far larger than the owners’ meetings, renting for about $500 for a full or half day. The owners offered no evidence that their own rate was reasonable, so the court allowed $500 per meeting for roughly one meeting a month, noting that only small portions of the homes were used and calling that “actually generous.” It agreed with the IRS that the owners seemed to have adopted a scheme to distribute the company’s earnings through purported rent. Including amounts the IRS had already allowed, the total for three years was $16,500.³

Jadhav v. Commissioner (2023)

A couple paid a promoter $50,000 for a tax plan that included renting their properties to the wife’s S corporation for 14 days each at $2,000 to $2,500 a day: four properties in 2014 and fewer in later years, $308,000 over 2014 through 2017. They had no appraisals and no other evidence of fair rental value. The court held the payments were unreasonable and something other than rent, declined to estimate any partial deduction and upheld the 20% accuracy-related penalties the IRS had originally determined on the couple’s underpayments, which also reflected other disallowed items.⁴

Neither case turned on the homeowner’s exclusion. Both disallowed the company’s deduction, which raised the income passed through to the owners. That is the realistic downside: the arrangement doesn’t blow up on your side, it loses the deduction that made it worth doing, and penalties and interest can follow.

Who can use the Augusta Rule?

You need a separate taxpayer to pay you rent. An S corporation or a C corporation is a separate taxpayer, and a partner who rents property to a partnership other than in the capacity of a partner is generally treated, for that transaction, as an outsider.⁹ A sole proprietorship, or a single-member LLC that hasn’t elected corporate taxation, isn’t separate: its activities are treated as the owner’s own, so a payment from the business to you is a payment to yourself.⁸ For those owners, the home office deduction is the route, if the space qualifies.¹¹

If you’re an S-corporation owner who works in the business, rent isn’t wages, so it does nothing to satisfy the reasonable-compensation requirement. An arrangement that stands in for salary invites the conclusion the court reached in Sinopoli, where it agreed with the IRS that the rent appeared to be a way to distribute the company’s earnings.³

How much can your company pay?

No statute sets a daily rate. The question is what an unrelated party would pay for the same use. The IRS’s general description of a fair rental price is the amount someone unrelated to you would be willing to pay, looking at property of similar size, condition, furnishings and location used for the same purpose.⁵ In Sinopoli, the owners offered no evidence that their rate was reasonable, so the court accepted the IRS’s meeting-space figure and pointed out that only a small part of each home was used.³

In practice, that means pricing the space you actually use, for the number of people attending and the hours you’re there, against real local venues that would host the same meeting: hotel meeting rooms, coworking conference rooms, event spaces. A dated quote for a four-hour meeting room for six people is evidence. The nightly rate of a luxury vacation rental, applied to a dinner at your kitchen table, is not.

What records hold up?

Both cases were lost on paper as much as on price. In Sinopoli, the IRS allowed only meetings substantiated with notes of an actual meeting, and the court pointed to the absence of minutes, agendas and calendars.³ For each rental day, keep:

• A written rental arrangement between you and the company, approved before the first use.
• An agenda and minutes showing the business conducted, who attended and how long it ran.
• Your comparables file supporting the rate.
• An invoice from you to the company and payment from the company’s bank account to yours.
• A calendar of every day the home was rented to anyone during the year.

Our free Augusta Rule documentation kit includes a three-venue rate worksheet, a meeting log, an invoice template, a 14-day tracker and a substantiation checklist.

How is the rent reported?

The company deducts the rent on its return. Because the payee is an individual, the 2026 instructions call for a Form 1099-MISC when rent paid during 2026 totals $2,000 or more; the instructions contain no exception for an owner or for rent excluded under section 280A(g).^6,7 The form is due to you by February 1, 2027.⁶

On your side, the IRS says rental income for fewer than 15 days isn’t reported on Schedule E.⁵ There’s no IRS guidance on squaring that with a Form 1099-MISC in the IRS’s records; in both Tax Court cases, the owners generally reported the rent and then excluded it.^3,4 Decide with your preparer how your return will show it, so an automated matching notice doesn’t come as a surprise. More on the new threshold: the $2,000 1099 rule for 2026.

What has to happen by December 31, 2026?

1. Count the days. Every 2026 rental day, to anyone, must total 14 or fewer, and the meetings must have taken place in 2026.¹
2. Pay the rent by December 31. The company’s deduction requires the expense to be paid or incurred during the year.² An accrual-method S corporation generally can’t deduct an amount owed to a shareholder until the shareholder includes it in income; how that rule works when the income is excluded is unsettled, which is one more reason to pay in cash before year-end rather than book a payable.¹⁰
3. Finish the minutes and agendas while the meetings are fresh.
4. File the comparables with the rental arrangement.
5. Plan the Form 1099-MISC for January.

When isn’t it worth it?

If your company has no real reason to meet at your home, no amount of paperwork fixes that. The same is true if the only comparable you have is your own estimate, if you’d need more than 14 days, or if you already rent the home short-term and the extra days would push you past the limit. A few properly priced meetings a year produce a modest, defensible deduction. Five-figure annual rents are exactly what the Tax Court cut to $500 a meeting in Sinopoli.³