Augusta Rule (14-Day Rule): Renting Your Home to Your Business

What are the Augusta rule requirements?

A homeowner who rents out a home they live in for fewer than 15 days in a tax year leaves the rent out of income. Section 280A(g) says the rent is not included in gross income and no deduction is allowed because of the rental. Publication 527 adds that the rent and rental expenses are not reported on Schedule E, while mortgage interest and property taxes stay on Schedule A as usual. People call this the Augusta rule or the 14-day rule.

For your company to rent your home this way:

• You use the home as a residence. With fewer than 15 rental days, section 280A(d) treats a home as a residence when you use it personally on more than 14 days of the year. A main home meets this test. A second home meets it only if you use it personally on more than 14 days.
• The rental is real. A separate taxpayer, not you, uses the home on stated days and pays for it.
• The home is rented fewer than 15 days in total. Every day rented to anyone counts, not only the company's days.
• For the company's deduction, the use is for business, at a reasonable rent, with payment and records. An S corporation or partnership also faces the extra rule in the next section.

The case that most needs a professional first: rent already paid, or planned before year end, with no dated agreement, business purpose or rate on file, or rent an S corporation or partnership has already deducted. Those records are hard to create afterward.

What else makes a case not simple. The statute covers the homeowner's side only. The company's deduction rests on the general business-expense rules and on facts, and no IRS publication sets a daily rate, a method or required paperwork. A case needs professional judgment when the home is also rented to others, the renter is a partnership or a one-owner LLC, or the owner's salary is low. This page covers federal income tax; state rules can differ.

What to gather: the entity's formation documents (and the S election, if there is one), a calendar of every day the home was rented to anyone, agendas and minutes, written rate quotes from local meeting venues, and bank records of each payment.

Can I charge my own company rent for my home?

A company that is not an S corporation can deduct rent for your home when the home is used for company business and the rent is reasonable. Section 162(a)(3) allows rent for property used for the purposes of a trade or business, and Publication 334 says a business cannot deduct unreasonable rent.

An S corporation or partnership faces an extra rule. Section 280A(a) disallows deductions for a dwelling unit used as a residence by an individual or an S corporation, and section 280A(f)(2) counts a shareholder's personal use of the home as the S corporation's own. The Form 1120-S instructions say: "Don't deduct rent for a dwelling unit occupied by any shareholder for personal use" (Line 11). The Form 1065 instructions say the same for a dwelling unit a partner occupies (Line 13). A C corporation is outside section 280A(a), and its Form 1120 instructions have no such sentence on the rent line. No source reviewed says business use on the rental days lifts the limit for an S corporation or partnership. Treat that company's deduction as unsettled and review it with a CPA before claiming it. Your own exclusion under section 280A(g) does not depend on it.

Section 280A(g) does not address the company, so a company's deduction is not automatic. It holds up better when:

• There is a business purpose. A board meeting, shareholder meeting or planning session with an agenda is business use. A family dinner is not. With one shareholder, no IRS source says how many attendees a meeting needs: the agenda, the decisions made and the work product carry the weight, and a meeting of only you, with no agenda or decisions, is the weak case.
• The rent is reasonable. See the rent section below.
• The event is not personal or entertainment. Section 262 denies deductions for personal, living and family expenses. Section 274(a) denies deductions for an activity generally considered entertainment, amusement or recreation, and for a facility used for it.
• The rent is paid and booked as rent. See the payment section below.

Which entities can rent a home under the Augusta rule?

The rule needs two separate taxpayers: the homeowner and a renter that pays. An S corporation and a C corporation are separate taxpayers. A partnership is treated as separate for payments to a partner acting as an outsider (section 707(a)(1)), so each can be the renter. A sole proprietorship, or a one-owner LLC with no corporate election, cannot: the owner would pay rent to the owner.

How many days count toward the 14-day limit?

The home must be rented fewer than 15 days in the tax year, so 14 days at most. Section 280A(g) counts every day the home is actually rented, whoever the renter is. Days rented to the company, to guests on a rental platform, to a film crew or to a neighbor add up in one total for that home.

• Part of a day. The statute and Publication 527 do not say how to count a two-hour meeting. Counting each calendar day with any rental as one day is the cautious approach.
• More than one home. The statute applies to a dwelling unit, so each home has its own count.

What rent is reasonable under the Augusta rule?

Rent is defensible when it matches what an unrelated party would charge for the same space and use. Publication 334 says rent paid to a related person is reasonable if it equals what you would pay a stranger for use of the same property. Publication 527 uses the same yardstick on the owner's side: a fair rental price is generally what a person unrelated to you would be willing to pay. No IRS source sets a daily rate, so the number is a question of facts.

To support the number:

1. Get written quotes or posted rate sheets from two or three local venues with comparable space: similar capacity, hours and services.
2. Price what the company uses, such as one room for the meeting hours, not the whole house for a full day.
3. Date the quotes and keep them with the rental agreement.

Warning signs that rent is unreasonable:

• A rate far above the local quotes, or a full-house, full-day price for a short meeting in one room.
• A rate or number of days chosen to move a target amount of cash to the owner instead of matching the meetings held.
• A low salary paired with high rent. The IRS says it can reclassify payments to a shareholder-employee from non-wage distributions to wages. That page does not address rent. See S corporation owner salary.

What records should exist before and after each rental day?

The records should show that the rental was planned, that the business use happened and that the rent was paid. No statute or IRS publication requires these exact documents. They are the evidence that Publication 583 and section 6001 point to: supporting documents that show the amount paid and that it was for a business expense, and records sufficient to show whether tax is owed. Keep them until the period of limitations for the return runs out (the time the IRS has to audit it): usually 3 years after the return is filed, longer in some cases (Publication 583, Table 3).

When must the company pay the rent?

The company should pay the rent in the tax year of the rental days, by a traceable payment from its account to the owner. The delay rule matters mainly to a company that deducts expenses before paying them (the accrual method); a company on the cash method deducts only what it has paid. Section 267(a)(2) and (e) can push that company's deduction for rent owed to an owner who reports income when paid to the year the owner would include it in income, and Publication 334 states the same rule for related payees who report income when paid. Because the owner never reports Augusta rent as income, no source says whether this delay rule applies to it. Paying within the year of use is the cautious course, but no source says it settles the question. Rent paid in advance is deductible only for the part that applies to the current year (Publication 334).

Does the company file Form 1099-MISC for Augusta rent?

A company that pays one person rents of $2,000 or more in a year, in the course of its business, reports them in box 1 of Form 1099-MISC (IRS instructions). The statute sets that threshold for payments made after 2025, counted by calendar year, including for a company with a fiscal tax year (section 6041(a)). The IRS instructions word it as tax years beginning after 2025; follow the statute. For payments through 2025 it was $600, so rent paid in earlier years may have needed a form that the current figure would not require. The instructions say box 1 covers all types of rents and list real estate rentals paid for office space as an example. They do not name a home rented for meetings, so the company should treat the payment as rent. Payments to a corporation are generally exempt, but the payee here is the owner as an individual. The regulation lists rents as reportable income (26 CFR 1.6041-1(a)(1)); neither it nor the instructions say whether rent the owner excludes under section 280A(g) is covered. An IRS revenue procedure treats a different excluded payment as not reportable (Rev. Proc. 2021-47, section 4.01), but it does not mention rent. Until a CPA confirms, filing avoids the penalty for a missed form. That penalty falls on the company, per form and per statement (section 6721, section 6722).

• Deadlines. For rent paid in 2026, the company furnishes the owner's statement by February 1, 2027 and files with the IRS by March 1, 2027 on paper or March 31, 2027 electronically. The usual dates (January 31, February 28 and March 31) move to the next business day when they fall on a weekend or holiday. A company filing 10 or more information returns of all types in the year must file electronically (General Instructions for Certain Information Returns).
• Below the threshold. No Form 1099-MISC is required unless the company withheld federal income tax under the backup withholding rules (tax a payer holds back in some cases, such as when the payee gave no taxpayer ID). The agreement, records and proof of payment are needed either way.
• For the owner. The IRS says it uses the form to determine whether the recipient properly reported the payment. Keep the agreement and the day count with the tax records to show why the amount is not on the return.

What if I rent the home for 15 days or more?

When a home is rented 15 days or more, all of the rent is income, including the rent for the first 14 days, and the owner divides expenses between rental and personal use. Publication 527 says to include all the rental income, names Schedule E as the basic form for residential rentals, and says a net loss limits the deduction for some expenses.

If you are also an employee of the company and work in the home on those days, section 280A(c)(6) says the business-use and rental-use exceptions do not apply to items tied to that rental. The rent is still income, but expense deductions for those days may be lost. The sources do not say how this applies to meeting days.

What is self-rental on Schedule E?

Self-rental means renting property you own to a business you own or run. When the rent is reportable (15 days or more), Schedule E is the basic form for it (Publication 527). Publication 925 says that if you rent property to a trade or business in which you materially participated, net rental income from the property is treated as nonpassive income. Passive losses from other activities then cannot offset it. The company can still deduct reasonable rent under the tests above, so the same dollars can be the company's deduction and the owner's income. For counting days and splitting expenses, see fair rental days and personal use.

What are the common Augusta rule mistakes and audit risks?

A missing agreement, an unsupported rate, unpaid rent, other renters' days, personal events and a missing Form 1099-MISC are covered above. These add to them:

If the company's deduction is denied, its taxable income rises by that amount, and Publication 334 allows no deduction for unreasonable rent. No source says how the IRS would treat the payment instead, so that turns on the facts.

Example

These examples use US dollars and round numbers. They illustrate the steps, not a rate.

Four board meetings at home

An S corporation owner who lives in the home (more than 14 personal-use days that year) holds four one-day board meetings there. The company collects written rates from three local venues for a similar room and, in an agreement signed before the first meeting, agrees to pay a daily rate set from those quotes (US$600 here, a made-up figure). It pays US$2,400 by company check in December, and the home has no other rentals that year. Four days is fewer than 15, so the owner leaves the rent off Schedule E. If its deduction is allowed (see the S corporation rule above), the company books US$2,400 as rent expense, supports it with the agendas, minutes and quotes, and, with the total above the reporting threshold, files a Form 1099-MISC (see the exclusion question above). Whether the IRS accepts the amount depends on the facts.

A sole proprietor pays herself

A sole proprietor with a one-owner LLC and no corporate election moves US$2,400 from the business account to her personal account and calls it rent. The LLC and she are one taxpayer, so there is no separate deduction and no rent income. The transfer is an owner draw in the books.

Ten platform days plus six company days

An owner who lives in her house (more than 14 personal-use days that year) rents it on a rental platform for 10 days and to her S corporation for 6. That is 16 rental days, which is 15 or more, so section 280A(g) does not apply. She reports all the rent, from both renters, on Schedule E and divides the house's expenses between rental and personal use. Whether the S corporation can deduct its rent is the separate question above. Had the platform rental been 8 days, the total would be 14 and the exclusion would cover all of the rent. If she also works in the house for the company on those days, section 280A(c)(6) can bar some of the expenses.

Different for you?

• You already ran rent through the company, or plan to before year end, and cannot show the dates, the business purpose and a rate, or your S corporation or partnership already deducted it: the owner's exclusion and the company's deduction both rest on those records, and a missing record is hard to replace afterward. Whether your entity fits, which days and documents you can produce, and how to treat years already paid are questions for corporate tax help.
• The rent was booked as an owner draw, a distribution or a personal expense, or your books are behind: see S corporation paying personal expenses and bookkeeping help.
• The company never filed a Form 1099-MISC, or the IRS is asking about rent on one you received: see late contractor and employee tax forms and get corporate tax help.
• You are a sole proprietor or a one-owner LLC with no election: rent to yourself has no tax effect. If you work from home, see the home office deduction.
• The home is also rented to others, or your count is near or past 15: see fair rental days and personal use.
• You want the company to repay home office, phone or car costs, or your S corporation salary is low or not set: see reimbursing owner expenses and S corporation owner salary.