Augusta Rule (Section 280A — 14-day home rental)

The "Augusta Rule" comes from IRC Section 280A(g), which says rental income from a personal residence rented for 14 days or fewer per year is not includible in gross income.

The mechanics

A business owner can rent their personal residence to their business for legitimate business purposes (board meetings, team off-sites, client events) for up to 14 days a year:

• Business deducts the rent expense (assuming legitimate business purpose + fair-market value)
• Homeowner excludes the rent income from their personal return

If the business is a passthrough (S-Corp, partnership), the deduction reduces the owner's K-1 income — effectively moving money from the business to personal, tax-free.

Documentation requirements

• Legitimate business purpose: documented meetings, agendas, attendees
• Fair-market value: comparable rental rates from Airbnb, hotel meeting rooms, or local event venues
• Written rental agreement between owner and business
• Payment trail: business actually paying the homeowner

The Sinopoli T.C. Memo 2023-105 case is the most-cited recent example of the IRS challenging Augusta Rule claims with weak documentation. The taxpayers lost largely because they couldn't substantiate FMV.

Practical use

A typical fact pattern: founder-CEO with an S-Corp business. Hosts 8 board/team meetings a year at their home. Documents each meeting with agenda + attendees. Sets rent at $1,200/day based on comparable Airbnb listings of similar properties. Business deducts $9,600. Owner excludes the same $9,600 from personal income.

In the 32% bracket: ~$3,000 of federal tax savings annually, plus state.