Internal Revenue Code §280A(g), commonly called the Augusta Rule, addresses a dwelling unit used as a residence and rented for fewer than 15 days during the year. Under the rule, the rental income generally is not reported, and rental expenses attributable to that short rental period generally are not deducted.
Why business owners hear about it
A business may sometimes rent an owner’s residence for a genuine business activity, such as a properly documented meeting. The business deduction and the homeowner’s income exclusion are separate questions. The payment must still represent an ordinary and necessary business expense, and the amount should reflect a reasonable fair-market rental rate.
Documentation matters
- Identify a bona fide business purpose and attendees.
- Use a written rental agreement or contemporaneous authorization.
- Support the rate with comparable local meeting-space or short-term rental information.
- Keep agendas, minutes, invoices, proof of payment, and evidence the activity occurred.
- Track all days the residence is rented and remain below 15 days if relying on §280A(g).
What the rule does not do
It does not make unreasonable shareholder payments deductible, turn personal gatherings into business meetings, or eliminate documentation requirements. Related-party transactions receive added scrutiny, and other rules may apply to corporate distributions or compensation.
This article provides general information and is not individualized tax advice.