Rent out your home to your business for up to 14 days tax-free.
Commonly referred to as Augusta rule tax strategy, Augusta rule deduction, Augusta Rule 280a, Augusta Rule Section 280a and Masters Rule.
Do I Qualify for the Augusta Rule?
The IRS allows business owners to rent either their primary residence or a vacation home located in the United States to their business for up to 14 days each year without including income from the rental in the owner’s taxable income.
2022 Augusta Rule Details
You can rent out your home to your business (or for other purposes like Airbnb) for up to a total of 14 days each year. Your home can be located anywhere in the United States and the income from the rental is excluded from your taxable income.
To establish a reasonable rental price you need to document local pricing standards. Contact at least three local establishments where businesses would normally have meetings, such as country clubs or hotels, to get an idea of venue costs in your area.
You can use your home for a variety of business purposes, including planning sessions and even company parties. It’s recommended that you schedule your meetings in your calendar system and send out an agenda if possible.
There is no minimum participant requirement, but keep in mind:
• The daily rental rate doesn’t include the cost of business meals.
• The home can’t be considered a full-time rental property.
• If you rent out your home for more than 14 days, you’ll have to report all the income and won’t get the tax benefit.
There Are Thousands of Other Tax Planning Strategies You May Be Missing Out On
Learn how Prosperity Tax Advisors can help you save money in taxes.
• Increases tax deductible business expenses.
• Increases your personal income without any additional tax.
• None noted.
Assumptions When Taking the Augusta Rule
• None noted. Please see requirements below.
• None noted.
Requirements to Claim the Augusta Rule
• A written rental agreement.
• Thorough documentation supporting the rental price.
• Meeting documentation such as meeting minutes and notes.
• The business entity structure must be an S corporation, C corporation, or partnership. It can’t be a Schedule C (self-employment income), unless the entity is a Single Member LLC.
Business Entities That Can Claim the Augusta Rule
• Schedule C
• S Corporation
• C Corporation
The material discussed on this page is meant for general illustration and/or informational purposes only and is not to be construed as investment, tax, or legal advice. You must exercise your own independent professional judgment, recognizing that advice should not be based on unreasonable factual or legal assumptions or unreasonably rely upon representations of the client or others. Further, any advice you provide in connection with tax return preparation must comply in full with the requirements of IRS Circular 230.