Renting your home to your business for up to fourteen days
The Augusta rule lets a homeowner rent a personal residence to their own business for no more than fourteen days in a year and exclude that rental income from personal tax, while the business deducts the rent it pays. Done correctly, the rent is set at fair market value, documented with real business purpose, and paid from the company account.
Stable law
There is no capital outlay — the cash simply moves from the business to the homeowner as rent. The real cost is documentation: obtaining fair-market comparables, drafting the rental agreement, and keeping agendas and minutes that show each use was a real business event.
Key points
- A dwelling used as a residence can be rented for fourteen days or fewer in a year without the owner reporting the rental income.
- The business deducts rent paid under a written rental agreement from the company account, and the homeowner excludes that same rent from personal income.
- Fair market rent must be supported by written comparables, such as quotes from two or three real venues for a comparable event.
- Each use needs contemporaneous evidence of genuine business purpose: an agenda, the attendees, minutes, and what was actually accomplished.
- Rental use beyond fourteen days, or renting a space already claimed as a home office, puts the arrangement outside the exclusion.
What is it?
A special rule for a dwelling used as a residence says that if you rent your home for fourteen days or fewer during the year, you do not report the rental income at all. The rule exists for homeowners who occasionally rent out a residence, but it applies equally when the renter is your own business paying for legitimate use of the space.
Used properly, the business pays you rent for genuine business use of your home — a board meeting, a planning retreat, a recorded training session — and deducts that rent as an ordinary expense. You receive the payment tax-free on the personal side because the fourteen-day exclusion applies. The two sides only work together when every element is real: the days, the rate, the purpose, and the payment.
This is among the most abused ideas in the online tax genre, usually because people treat it as a way to move money from the business to themselves without regard for whether anything actually happened. The rule rewards a real, occasional business use of a residence priced at what an outside venue would charge. It does not reward a paper transaction dressed up as a meeting.
Who does it apply to?
Homeowners who genuinely hold occasional business events — meetings, retreats, or recordings — at their residence and can document a real business purpose for each one.
Owners whose business is a separate taxpaying or reporting entity that can deduct rent paid for legitimate use of the space.
Owners willing to obtain fair-market comparables, sign a written rental agreement, and pay the rent from the company account for each qualifying use.
Who does it not work for?
- Owners who already deduct a home office for the same space, since the space cannot be both a deducted office and separately rented under this rule.
- Rents set above what any comparable venue would charge, where the amount has no market basis and reads as a distribution rather than rent.
- 'Meetings' with no agenda, no minutes, and no evidence anything took place — the business purpose has to be real and documented.
- Use that exceeds fourteen rental days in the year, which takes the arrangement out of the exclusion entirely.
- An owner-only 'meeting' where the sole attendee is the owner and there is no genuine business reason to use the home rather than an ordinary workspace.
What does the IRS look at?
- Whether the total rental use stayed at fourteen days or fewer for the year, counted accurately.
- Whether the rent equals fair market value, supported by written comparables such as two or three quotes from real venues for a comparable event.
- Whether each use had a genuine business purpose, evidenced by an agenda, minutes, attendees, and what was actually accomplished.
- Whether a written rental agreement exists and the rent was actually paid from the company account to the homeowner.
- Whether the homeowner correctly excluded the income and did not also deduct expenses tied to the excluded rental on the personal return.
What does it cost to fund, and when does the window close?
There is no capital outlay — the cash simply moves from the business to the homeowner as rent. The real cost is documentation: obtaining fair-market comparables, drafting the rental agreement, and keeping agendas and minutes that show each use was a real business event.
A CPA should confirm the rate is defensible and that the exclusion is reported correctly, and the documentation must be created contemporaneously with each use rather than reconstructed later. Because the exclusion is capped at fourteen days, the calendar has to be tracked through the year.
Suppose comparable local venues quote about $1,500 for a full-day meeting space with similar amenities. Your business holds twelve documented board and planning sessions at your home during the year and pays you $1,500 for each. The business deducts the total rent, and because the use stayed at fourteen days or fewer, you exclude the income from your personal return.
Related strategies
- §62Reimbursing owner and employee expenses correctlyNo outlay
- §162Paying your children for real workNo outlay
- §469Buying the building your business operates fromCapital outlay
Common questions
- How do I prove the rent is fair market value?
- Obtain written quotes from two or three real venues for a comparable event and keep them in the file for the year of the rental. The rent the business pays should sit inside the range those quotes establish, and the comparables should be gathered at the time of the use rather than reconstructed later. A rate with no market basis, or one far above what an outside venue would charge, is the first item an examiner challenges and reads as a distribution rather than rent.
- Can I use this if I already claim a home office?
- Not for the same space. Section 280A does not let the same area of a residence be both a deducted home office and a separate rental to the business, because the office deduction already accounts for that space. If part of the home is claimed as an office, layering a rental of it on top invites the whole arrangement to be unwound. Confirm the interaction with a CPA before claiming both in the same year.
- Do the meetings really need agendas and minutes?
- Yes. The exclusion depends on a genuine business purpose for each use, and contemporaneous records are how that purpose is shown: an agenda, who attended, what was decided, and why the residence was used rather than an ordinary workspace. A meeting that exists only as a line in the accounting, with no supporting record, will not survive scrutiny. An owner-only session with no business reason to be at the home is the weakest version of the arrangement.
Mena Hemaia, CPA, CIA
Chief Executive Officer, Accountack — West Palm Beach, Florida
If you want to know which of these apply to your business specifically, that is a conversation about your actual numbers — not a seminar example.
Or start with the Free Cash Clarity Audit — A no-cost review of where your business stands and what a planning engagement would target — the firm's own named starting point.
20 minutes with an Accountack advisor. If a technical review is worth your time, the next step is a workshop with Mena — and if there is nothing material to do, he will say so.