Section 280A(g) of the Internal Revenue Code contains a limited rule for a dwelling unit that the taxpayer uses as a residence. If the home is rented for fewer than 15 days during the tax year, the rent generally is not included in income under this rule. The IRS also says that rental expenses from this activity are not treated as rental expenses. The rule is often called the “14-day rule” or the “Augusta rule.”
What the rule does—and does not—do
The rule is not a general tax-free rental strategy for every property or every owner. Whether a dwelling unit is used as a residence, how rental days are counted, and how the arrangement is documented all matter. If you rent the residence for 15 days or more, different reporting rules apply and rental income is generally reported.
Renting a home to a business you own does not automatically make the rent a deductible business expense. The business must have a genuine business purpose for using the space, the amount should be reasonable compared with similar venues, and the expense must satisfy the applicable business deduction rules. The parties should document the dates, purpose, attendees, services provided, and how the rent was determined. A personal or family event does not become a business expense merely because a business pays for it.
Keep contemporaneous records, including an agenda or meeting notes, invoices or payment records, evidence of fair-market rent, and a calendar of personal and rental use. Ask a tax professional how the rules apply to your home, entity, and specific event before booking or paying rent.
This article is educational only and does not determine whether any particular payment is deductible or whether a taxpayer qualifies for Section 280A(g).
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