Yes — the Augusta rule is real. In 2026 you can rent your home to your own business for up to 14 days, let the business deduct the rent, and keep that rent off your personal return entirely.

The catch is that the rent has to be priced like a stranger would pay, and every meeting has to be documented. I put it among the cleaner moves in small business tax deductions — when it's done on paper.

Is the Augusta rule actually real?

Yes, the Augusta rule is real. It comes from a federal statute — 26 U.S.C. §280A(g) — which says that if you use a dwelling unit as your residence and it's actually rented for less than 15 days during the year, two things happen: the rent you collect is not included in your gross income, and you get no rental deductions for those days. The IRS says the same thing in plain English in Tax Topic 415: use a dwelling unit as a residence and rent it for fewer than 15 days, and you "don't report any of the rental income and don't deduct any expenses as rental expenses."

The statute never says "Augusta" and never says "14 days" — the name is folklore about Augusta, Georgia homeowners renting their houses out during the Masters golf tournament, and "14" is just the largest number that is still less than 15.

The skepticism is understandable, because the version that circulates in videos sounds too good. One owner asked it plainly on the TurboTax community:

"Does anyone know if a single member LLC subchapter S-corp can legitimately rent their home to their business under the 14-day rule per 280A? This would be in lieu of the typical deductions associated with business use of home." — katie1234, TurboTax Community, July 29, 2021

The first answer she got was a warning: "Doesn't look like there's a specific prohibition against that in that section but it definitely defies the spirit of the law which is for incidental residential use by other parties. Not only would this be for business use by your LLC but you also own the home and 100% of the business so might not be a good idea to try this maneuver." — M-MTax, same thread

That reply is a forum poster's opinion, not law. The better evidence is what happened when the Tax Court looked at exactly this structure — owners who owned both the home and 100% of the business — and allowed the rent that was documented and priced reasonably, while throwing out the rest. That case is the spine of this post, and it is covered in full below.

How does renting your home to your own S-corp work?

It works because there are two taxpayers involved, and each side has its own code section. Your business deducts the rent as an ordinary and necessary business expense under §162(a)(3), which covers "rentals or other payments required to be made as a condition to the continued use or possession, for purposes of the trade or business, of property." You, the homeowner, exclude the same rent from income under §280A(g). The business's deduction and your exclusion are two separate provisions applying to two separate taxpayers — that is the whole mechanism.

In practice, a defensible arrangement looks like this:

• A genuine business purpose — real meetings, planning sessions, or work days that would otherwise happen in a rented room.
• A written rental agreement between you and the business, at a rate supported by comparable quotes.
• An actual payment each time — money moves from the business account to you personally, with an invoice.
• A record of each meeting made at the time: date, attendees, what was discussed.
• No more than 14 rental days in the year.

One point worth knowing: the rent is not wages, so no payroll tax is withheld on it. It is simply a deductible payment from the company to you, excluded on your side. If you want the fuller picture of how money moves between an S-corp and its owner, our post S-Corp Taxes Explained was written for owners who elected S status and covers the salary-versus-distribution mechanics in detail. For the wider map of every federal tax a new owner owes, our small business taxes guide lays it out.

How much rent can you charge under the Augusta rule?

The rent has to be a fair rental price — what an unrelated person would pay for a comparable space, not a number backed out of how much income you want to move. IRS Publication 527 defines a fair rental price as "generally the amount of rent that a person who isn't related to you would be willing to pay," and it gives the comparison questions to ask about another property before treating its rate as yours:

• Is it used for the same purpose?
• Is it approximately the same size?
• Is it in approximately the same condition?
• Does it have similar furnishings?
• Is it in a similar location?

The practical move: get two or three written quotes for comparable meeting space in your area — a hotel meeting room, a coworking conference room — and save them in the tax folder. Price your day rate at or below those quotes. What you should not do is take a per-square-foot rate for commercial meeting space and multiply it across the common areas of your house. That is exactly the pricing method the Tax Court rejected in the case below, where it produced $3,000 per owner per month for meetings the court valued at $500 each.

What happened when the Tax Court looked at the Augusta rule?

The court allowed it — in part. In Sinopoli v. Commissioner, a 2023 Tax Court memorandum opinion, three owners of a Planet Fitness franchise company — an LLC taxed as an S-corp — had been meeting at a hospital or at one of the gyms. Beginning in 2015 they adopted a plan to hold business meetings at their personal residences and have the company pay each of them rent.

Here is what they did, and what it turned into:

• One owner researched local meeting-space rates, found a figure of $1.83 per square foot, and applied it to the common areas of each residence.
• Monthly rent to each owner started out at different amounts based on the size of each home's common space; by 2016 the company was paying $3,000 a month to each owner, and over less than three years it deducted $290,900 in rent paid to the three of them.
• The owners excluded the rent from their personal income under §280A(g).
• They produced no minutes, agendas, or calendars for the meetings; the court called their testimony about the meetings "vague and unconvincing" and found it "not credible as to the frequency of meetings."

The revenue agent who examined the returns priced locally available meeting space — rooms accommodating 500 to 1,200 people — at approximately $500 for a full or half day, and allowed $500 for each meeting the owners could substantiate with notes: zero meetings documented for 2015, 12 for 2016, 9 for 2017. The court agreed with the agent's $500 figure, called it "actually generous" given that only small portions of the residences were used, and added 12 meetings for 2015 based on testimony that some meetings did occur. It also said the arrangement "seems" to have been "a tax savings scheme to distribute Planet's earnings to petitioners through purported rent payments."

The arithmetic:

• Allowed: $6,000 for 2015 (12 meetings × $500), $6,000 for 2016 (12 × $500), $4,500 for 2017 (9 × $500) — $16,500 total.
• Disallowed: $290,900 − $16,500 = $274,400.
• Survival rate: $16,500 ÷ $290,900 = 5.7% of the claimed rent.

Three things about this case are worth stating plainly. First, the court did not hold that renting your home to your own S-corp is improper — it allowed $500 for every documented meeting, which is the rule working as written. Second, no penalties were assessed; the IRS determined none in the notices of deficiency. Third, it is a memorandum opinion about one group's facts, not a blanket rule — but the lesson generalizes: the rule survived, and what failed was the rate and the paper.

What changes for the Augusta rule in 2026?

For payments made in 2026, the business reports rent of $2,000 or more in box 1 (Rents) of Form 1099-MISC — up from the $600 floor that applied to 2025 payments, under the 2026 Form 1099-MISC instructions. So a year of monthly meetings at almost any defensible day rate now crosses the reporting floor, and the IRS will have the number. That is not a problem when the exclusion is real — but it means the paperwork is what answers any question.

One form detail matters. Rent belongs in 1099-MISC box 1, not on a 1099-NEC, which is for services. Another poster on the TurboTax community ran into exactly that mix-up:

"Hi - I rent my home out 12 times/yr to a business for them to have monthly company meetings. As part of that - they sent me a 1099-NEC. Where do I record that in Turbotax and also where do I record the Augusta rule SEC 280A(G) Exclusion? This is the only thing I rent my home out for - so no other expenses or income from this." — lanceman02, TurboTax Community, February 21, 2024

The reply he got, quoting Publication 527, ended with the right advice: "Be sure you have documentation for the purpose of the payments and the reason for excluding the income (including the IRS reference) should the IRS have questions." — PatriciaV, February 22, 2024

Publication 527 is direct on the reporting side: rent the home for less than 15 days and "you aren't required to report the rental income and rental expenses from this activity" — the mortgage interest and property taxes stay on Schedule A as they normally would. The business should still issue the correct form (1099-MISC, box 1), and you should keep the rental agreement, the meeting records, and the comparable-rate quotes with the return so the exclusion can be shown if anyone asks.

How much is the Augusta rule worth in real dollars?

At a defensible rate, the savings are real but modest — roughly 80% of the rent times your tax bracket, once the QBI deduction adjusts. Here is the arithmetic with illustrative assumptions, which you should replace with your own numbers:

• Assume 12 monthly meetings, and comparable meeting rooms in your area rent for $400 a day (an assumption — pull three real quotes for your file). Annual rent: 12 × $400 = $4,800, deducted by the S-corp and excluded by you.
• Assume you are married filing jointly with 2026 taxable income in the 22% bracket — between $100,800 and $211,400 under the 2026 rate tables in Rev. Proc. 2025-32. Gross saving: $4,800 × 22% = $1,056.
• The deduction also lowers your qualified business income by $4,800, so the 20% QBI deduction under §199A shrinks by $960. The net drop in taxable income is $4,800 − $960 = $3,840, and the real saving is $3,840 × 22% = $845 (at 24%, $922).

Contrast that with the Sinopoli numbers: at $3,000 per meeting, 12 meetings is $36,000 a year per owner; at the court's $500, it is $6,000. The $30,000 difference is a deduction that never existed — and the owners spent years in court to find that out. A smaller number that holds beats a larger number that doesn't, every time.

What gets an Augusta rule deduction thrown out?

Two things: a price a stranger wouldn't pay, and a meeting you can't prove happened — in Sinopoli those two problems turned $290,900 of claimed rent into $16,500 of allowed rent. The specific traps:

• Going past 14 days. The exclusion exists only when the home is actually rented for less than 15 days in the year. The planning target is 14 or fewer, counted carefully.
• Pricing off your house instead of off the market. A per-square-foot commercial rate applied to your living room is how $500 meetings became $3,000 meetings in Sinopoli.
• No contemporaneous paper. Agreement, invoice, payment, and meeting notes made at the time. Our post on tracking mileage was written for gig drivers, but the records principle carries over exactly: a record made at or near the time beats a reconstruction, and a court will not guess in your favor.
• Deducting rental expenses for the meeting days. The statute denies them — no cleaning, no utilities share for those days. And because an S-corp owner is an employee of the company, §280A(c)(6) separately blocks using the employer-rental route to unlock home-office deductions, so you are not giving anything up on that front.
• The wrong information form. Rent goes in 1099-MISC box 1, not on a 1099-NEC.

What should you do before your first meeting?

Six steps, done once: confirm the business is a separate taxpayer, pull comparable quotes, sign the agreement, write notes after every meeting, pay against an invoice, and count to 14. The sequence that holds up:

• Confirm your business is a separate taxpayer from you — an S-corp, or an LLC taxed as one.
• Pull two or three written quotes for comparable meeting space in your area and save them.
• Sign a short rental agreement at a day rate at or below those quotes.
• After each meeting, write the notes the same day: date, attendees, what was decided.
• Pay each rental from the business account against an invoice, and count your days — 14 is the ceiling.
• At year end, the business issues a 1099-MISC with the rent in box 1 if the 2026 total is $2,000 or more.

Want a second set of eyes on your Augusta rule paperwork before the first rent check moves? N&T Tax & Advisory Group helps S-corp and LLC owners price, document, and report owner-rental arrangements so the deduction holds — as part of the small business tax deductions work we do by phone or video, nationwide. Book a meeting with our team here.