Renting Your Home to Your Business - The Augusta Rule Made Simple
If you’re a small-business owner looking for smart, audit-friendly tax strategies, here’s a powerful one most people don’t realize they can legally use:
→ Your business can rent your home for legitimate business purposes
→ Your business deducts the rental expense
→ You receive the rental income tax-free (up to 14 days per year)
This is called the Augusta Rule, and when documented correctly, it’s one of the cleanest tax advantages in the IRS code for owners of S-Corps, C-Corps, and partnerships.
Let’s break it all down — what it is, who qualifies, how to document it, and how to use it safely.
What is The Augusta Rule?
The Augusta Rule comes from IRS Section 280A(g). Here’s the simple version:
If you use your home as a residence, and
You rent it out for 14 days or fewer,
The rental income is not taxable to you personally.
To stay audit-safe and avoid crossing the line, we recommend capping business-related rentals at 12 days per year — one structured meeting per month.
It’s easy to track, consistent, and keeps you comfortably under the IRS threshold.
How Business Owners Use It
If your business needs space for:
If your business needs space for:
✔ Board meetings
✔ Leadership or team meetings
✔ Annual planning
✔ Content creation or training days
✔ Client events
✔ Review sessions
…your home may qualify as a legitimate business rental location.
Your business pays you fair market rent, and:
Your business gets a deduction
You receive tax-free personal income (up to the first 14 days)
The key is: documentation must be airtight.
Your Business Must Be a Separate Tax Entity
This strategy only works cleanly when your business is a separate taxpayer from you personally.
Good fits:
S-Corporations
C-Corporations
Partnerships / Multi-Member LLCs taxed as partnerships
Not recommended:
Sole proprietorships / Schedule C
As a sole prop, you are the business — you can’t rent space to yourself.
Your business will issue you a 1099-MISC for the rent… but you still won’t pay tax on it. Under IRC §280A(g), rental income from a personal residence rented 14 days or less is excluded from taxable income.
How Much Can You Charge? (Fair Market Rent Only)
You cannot pull numbers out of thin air.
Your business must pay a reasonable, supportable rate consistent with local options, like:
Co-working meeting rooms
Hotel conference rooms
Corporate event spaces
Short-term professional rentals
Tip: Save 3–5 screenshots of comparable rates to support your pricing.
Documentation You Must Keep for Every Meeting
This is where most people get sloppy — and sloppy is where audits go sideways.
Here’s what you need for each meeting or rental day:
1. Written Rental Agreement
Between:
You personally, and
Your business (S-Corp, C-Corp, or partnership)
Include: purpose, date, rate, rooms used, and payment terms.
2. Agenda + Business Purpose
Clearly outline the meeting’s intention:
Strategic planning
Financial reviews
Marketing/content sessions
HR or team development
A one-page agenda is perfect.
3. Attendee List
Who was there + their roles.
4. Meeting Minutes
A simple bullet-point summary is enough:
What was discussed
Decisions made
Action items
5. Comparable Market Rates
Save documentation of local prices that justify your rate.
6. Proof of Payment
Actual transfer from:
Business bank account → Your personal account
No journal entries. No offsets. Money must move.
7. Annual Log
Track:
Each meeting date
Number of days used
Total days for the year
Stay below 14 rental days to keep all income tax-free. Again — this is why we recommend sticking to 12 structured monthly meetings.
Why Many Owners Choose 12 Days Instead of the Full 14
Choosing 12 days gives you:
✔ One meeting per month
✔ Easy documentation rhythm
✔ No risk of accidentally hitting day 15
✔ Predictable business calendar
✔ A smooth paper trail your CPA will love
✔ Clean audit defense
It’s consistent, simple, and safe.
Why This Strategy Works
Two tax principles overlap perfectly:
The business can deduct ordinary and necessary meeting expenses
You can exclude rental income for a residence rented 14 days or fewer
It’s legal, clean, and supported directly by the IRS code — as long as your documentation is strong.
Common Mistakes to Avoid
❌ Not keeping minutes
❌ Overcharging your business
❌ No comparable rental rates
❌ Not actually transferring money
❌ Using this as a sole proprietor
❌ Renting more than 14 days (kills the exclusion)
❌ No rental agreement or agenda
Do it right, or don’t do it — this is not a “wing it” strategy.
Should You Use The Augusta Rule?
It's a great fit if:
✔ Your business is an S-Corp, C-Corp, or partnership
✔ You run recurring meetings or planning sessions
✔ You have space suitable for business activities
✔ You’re willing to keep the required documentation
✔ You want tax-free income + a business deduction
If you want help setting this up properly, or want your books cleaned and organized so strategies like this are recorded correctly, that’s exactly what we do at Heartbeat Bookkeeping.
Clean books + smart tax planning ≈ a stress-free year-end and fewer surprises at tax time.
