Small business owners often host planning sessions, board meetings, client briefings, or content sprints at home—but many don’t realize there’s a compliant way to turn some of those days into tax-free rental income while your business legitimately deducts the expense. That’s the promise of the Augusta Rule tax strategy under IRS Section 280A(g)—when used correctly, it can amplify cash flow and tighten your documentation discipline. And this is exactly where a trusted advisory relationship beats a “file-and-forget” approach. As we say at B.A.A.P.: “Any CPA firm can record history. Our firm will help you build a future.”
The Augusta Rule says: if you use your home as a residence and rent it out for fewer than 15 days in a tax year, the rent you receive isn’t included in your income, and you can’t take rental-expense deductions for those days personally. In short: up to 14 days of rental income can be tax-free.
Yes—if your company has a bona fide business purpose (e.g., a quarterly planning off-site) and pays a fair market rental rate, your business may deduct the rent as an ordinary and necessary expense under §162, while you personally exclude the income under §280A(g). The key is business purpose and reasonableness.
The IRS frames “fair rental price” as what an unrelated party would pay for a comparable space in your area. Gather local venue comparables (hotel meeting rooms, cowork spaces, event homes), keep screenshots/quotes, and retain a signed short-term rental agreement, agenda, attendee list, and minutes for each day. This helps you show FMV and business purpose if asked.
Generally, yes: when a business pays $600 or more in rent during the calendar year, it typically must file an information return (Form 1099-MISC, Box 1 “Rents”) to report payments to the payee—even if the homeowner excludes the income under §280A(g). There are exceptions (e.g., payments to certain corporations), but they rarely apply to an individual homeowner. Confirm your facts and file on time.
A home office deduction deals with ongoing, exclusive-use space and prorated expenses. The Augusta Rule is about occasional, short-term rental days (≤14) for documented business events—no personal rental expense deductions for those days, but potentially tax-free income to you and an ordinary rent deduction to the business
Illustrative client example (fictional):
Jasmine owns a marketing agency taxed as an S-Corp. Each quarter, her leadership team holds a 6-hour strategy workshop. Local hotels quote $800–$1,100 per day for comparable meeting rooms. Jasmine rents her home’s open-plan living/dining area to the S-Corp for $900 per day, four times a year (total 4 days). She signs a one-page rental agreement (individual ↔ S-Corp), attaches the agenda, attendee roster, and minutes, and saves hotel quotes as FMV support. The S-Corp deducts $3,600 as rent under §162; Jasmine excludes the $3,600 under §280A(g) because she rented fewer than 15 days. The S-Corp issues a 1099-MISC to Jasmine because total rent paid exceeded $600.
Accountant vs. Advisor—why this strategy belongs in planning, not just filing
An “accountant” prepares returns after the fact. An advisor anticipates issues, builds plans, and helps you document correctly so audit-readiness is baked in. That’s our model at B.A.A.P.—we plan forward, not backward. And again, our north star: “Any CPA firm can record history. Our firm will help you build a future.”
Key guardrails & common pitfalls (quick checks):
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No. It applies to any dwelling you use as a residence (including your primary home) that you rent fewer than 15 days in a year.
Yes, if there’s a legitimate business purpose and you charge fair market value. The business may deduct rent under §162, and you may exclude up to 14 days of rent.
If you rent fewer than 15 days, you generally don’t report the rental income and don’t deduct related rental expenses for those days.(IRS)
If your business pays $600 or more in rent to you, an information return is generally required (Form 1099-MISC).
Save quotes from comparable venues and keep agendas, rosters, and minutes for each rented day.
