The Augusta Rule Explained: Tax Savings in Your Own Home

What Is the Augusta Rule?

The Augusta Rule, officially known as IRS Section 280A(g), is one of the simplest and most overlooked tax strategies available to business owners. It allows you to rent out your personal home to your business for up to 14 days per year and claim the rent as a tax-deductible business expense, while keeping that rental income completely tax-free on your personal return.

Yes, you read that correctly. The business receives a deduction, and you receive the income without paying any income tax on it.

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How It Works

Here is how to make it work properly:

1. Your Business Hosts Events: The business must have a legitimate reason to rent your home. Examples include strategy meetings, client appreciation events, team-building sessions, or annual planning retreats.
2. Set a Fair Rental Rate: You must charge your business a reasonable market rate that reflects what it would cost to rent a comparable space locally, such as a conference room or event venue.
3. Document Everything: Create an invoice from yourself (the homeowner) to your business, pay the invoice from the business account, and keep records such as meeting notes, agendas, or photos showing the legitimate business purpose.

By following these steps, your business receives a deduction for the rental expense, and the IRS allows you to exclude up to 14 days of that income from personal taxation.

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A Simple Example

Let’s say you hold quarterly strategy sessions and a holiday dinner for your team at your home. If your home could reasonably rent for $1,000 per day, you could bill your business $14,000 per year.

• The business deducts $14,000 as a legitimate business expense.
• You personally receive $14,000 tax-free.

If you are in a 35 percent combined tax bracket, that is nearly $5,000 in annual savings for a strategy that requires very little extra effort.

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Common Mistakes to Avoid

The Augusta Rule is simple, but like all tax strategies, it must be implemented correctly. Here are a few mistakes to avoid:

• No Documentation: You must have proof of business purpose, payment, and a reasonable rental rate.
• Overpricing the Rental: Charging inflated rates can attract IRS scrutiny. Use local venue listings or online rental comparisons to justify your rate.
• Exceeding 14 Days: Once you rent for more than 14 days, the income becomes taxable and requires separate reporting.

When executed correctly, the Augusta Rule holds up well under IRS review and provides a legitimate, ongoing tax advantage.

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Why It Matters for Business Owners

This strategy demonstrates a larger point: the best tax planning happens inside your daily life. By aligning your home and your business intentionally, you can create permanent tax savings without changing your lifestyle.

The Augusta Rule is a perfect example of how proactive planning can uncover thousands of dollars in legal deductions that reactive accountants often miss.

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How Shore Financial Helps

At Shore Financial, we help business owners design and implement strategies like the Augusta Rule correctly and confidently. Our team ensures your setup is fully documented, priced fairly, and supported by the right records so you can enjoy the benefit without worry.

👉 Want to see if the Augusta Rule could work for your business? Book a Free 15-Minute Consultation and we’ll show you exactly how to qualify and maximize your savings.
Book Here

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