Renting your home to your own business for up to 14 days (the Augusta rule, section 280A(g))

Figures are for tax year 2026. This Guide covers the federal rule in section 280A(g) of the Internal Revenue Code, often called the Augusta rule: if you use a dwelling unit as a residence and it is actually rented for less than 15 days in the tax year, you leave the rent out of your income and you deduct no expenses because of the rental. It is written for a business owner who is thinking of renting their home to their own business for meetings, and for their adviser. It covers who the plan can work for and who it cannot, the deduction on the business side, the day count, fair rent, the home office conflict, Form 1099-MISC and the records to keep. It does not cover state tax. Statute text is cited from the LII mirror of the U.S. Code (law.cornell.edu). IRS publications cited are the latest on irs.gov when this Guide was written: Pub. 527 and Pub. 587 are the 2025 editions and Pub. 542 is the January 2024 revision; the statutory rules they describe are not indexed. All worked examples are hypothetical.

The method, step by step

1. Identify who owns the home and who would pay the rent. The rent must pass from a separate taxpayer (a C corporation, an S corporation, or a partnership, including an LLC taxed as one of these) to the individual owner. If the business is a sole proprietorship or a single-member LLC that is disregarded, there is no separate payer: stop and read "Who it does not work for" (IRS: single-member LLCs).
2. Confirm the owner uses the home as a residence for the year under § 280A(d)(1). A main home lived in all year passes. A second home or a property that is mostly rented out needs the day test in the table below.
3. Count every day the dwelling unit is actually rented during the calendar year, to anyone, not only to the business. If the total is 15 or more, § 280A(g) does not apply to any of that year's rent: stop and use us-real-estate-professional-and-short-term-rentals for the ordinary rental rules.
4. Test the payer's deduction under § 162(a): each day of use must be an ordinary and necessary expense of carrying on the business, actually paid, for a real business event held at the home.
5. Set the rent at a fair rental for that use, with comparable quotes in the file before the event (Pub. 527). For a corporation, rent unreasonably more than the shareholder would charge a stranger may be treated, as to the excess, as a distribution rather than rent (Pub. 542).
6. Check for a conflict with any home office: an ongoing rental of a room to the owner's employer, or a room claimed as exclusively used for business, changes the result (§ 280A(c)(1) and (c)(6)).
7. The payer files Form 1099-MISC for rents at or above the threshold in the table below (Instructions for Forms 1099-MISC and 1099-NEC).
8. The owner leaves the rent off the return and does not file a Schedule E for it (Pub. 527). Mortgage interest, property tax and qualified casualty losses stay on Schedule A as normal.
9. Keep the records listed in "Records an examiner asks for" for every rental day (§ 6001).

The rule in the statute

Section 280A(g) says that, notwithstanding any other provision of section 280A or section 183, if a dwelling unit is used during the tax year by the taxpayer as a residence and is actually rented for less than 15 days during the tax year, then no deduction otherwise allowable because of the rental use is allowed, and the income derived from that use is not included in gross income under section 61 (§ 280A(g)). Both halves apply together. The owner gets the exclusion AND loses rental deductions for those days. The owner cannot choose to report the rent in order to deduct rental expenses.

Item	Value	Note
Source	all figures below	https://www.law.cornell.edu/uscode/text/26/280A
Rental days that keep the exclusion (14 days or fewer in the tax year)	less than 15 days	"such dwelling unit is actually rented for less than 15 days during the taxable year" (§ 280A(g)); not indexed
Residence test, first limb: personal-use days must exceed the greater of this or the second limb	14 days	"for a number of days which exceeds the greater of" 14 days or 10 percent of fair-rental days (§ 280A(d)(1))
Residence test, second limb	10 percent of the days rented at a fair rental	"(B) 10 percent of the number of days during such year for which such unit is rented at a fair rental" (§ 280A(d)(1))

The IRS says the same in plain words. If you use a dwelling unit as a home and rent it less than 15 days during the year, the rental is not reported on Schedule E and you are not required to report the rental income and rental expenses (Pub. 527). Topic 415 puts it as "don't report any of the rental income and don't deduct any expenses as rental expenses" (IRS Topic 415).

What the statute covers and what it does not:

• It covers a "dwelling unit": a house, apartment, condominium, mobile home, boat or similar property, with the structures appurtenant to it. It does not cover a portion of a unit used exclusively as a hotel, motel, inn or similar establishment (§ 280A(f)(1)).
• It applies only if the unit is used as a residence by the taxpayer in that tax year. Under § 280A(d)(1), a unit is used as a residence if the owner uses it for personal purposes for more days than the greater of the two limbs in the table above. A day counts as personal use if, for any part of the day, the owner, a co-owner, or a family member of either uses it, among other cases (§ 280A(d)(2)).
• It says nothing about who the tenant is. It does not give the tenant a deduction. Whether the business can deduct what it pays is a separate question under section 162, below.

Who it works for

The plan has two sides that are tested separately: the owner's exclusion under § 280A(g), and the payer's deduction under § 162. It produces a tax result worth having only where the payer is a different taxpayer from the owner, so that one side deducts and the other excludes.

• C corporation or S corporation that rents the shareholder's home. The corporation is a separate taxpayer. It can deduct rent under § 162(a)(3), which allows "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 to which the taxpayer has not taken or is not taking title or in which he has no equity", if the payment is also an ordinary and necessary expense of carrying on its business under § 162(a). The shareholder who owns the home excludes the rent if the 14-day count and the residence test are met.
• Partnership, including a multi-member LLC taxed as a partnership, that rents a partner's home. If a partner engages in a transaction with the partnership other than in the capacity of a member, the transaction is treated as occurring between the partnership and one who is not a partner, except as § 707 provides otherwise (§ 707(a)(1)). The partnership's deduction is still tested under § 162.

Who pays and who owns must line up. The exclusion belongs to "the taxpayer" who uses the dwelling unit as a residence and from whose rental use the income is derived (§ 280A(g)). If the home is owned by someone else (a trust, an entity, or one spouse alone), refer (see the last section).

Who it does not work for

• Sole proprietor. The business and the owner are the same taxpayer. Nothing is paid to anyone else. The rent deduction named in § 162(a)(3) is for "property to which the taxpayer has not taken or is not taking title or in which he has no equity" (§ 162(a)(3)), and a sole proprietor holds title to, or equity in, the home. So moving money from the business account to the personal account and calling it rent creates no deduction, and § 280A(g) has no rent to exclude. The home-based deduction open to a sole proprietor is the home office deduction under § 280A(c)(1), with its exclusive-use test (Pub. 587).
• Single-member LLC that is disregarded. For income tax purposes an LLC with only one member is treated as an entity disregarded as separate from its owner, unless it files Form 8832 and elects to be treated as a corporation (IRS: single-member LLCs). It is a sole proprietor for this purpose and gets the same answer. A single-member LLC that has elected to be taxed as a corporation is a corporation and falls under "Who it works for".
• An owner whose home is rented 15 days or more in the year, counting all tenants. The exclusion is lost for the whole year, not just for the days above 14 (see the day count below).
• An owner who does not use the unit as a residence that year under § 280A(d)(1). A property held only for rent does not qualify.
• A business that pays for days with no real business use. A family gathering, a holiday party for the owner's household, or a meeting that did not happen is not an ordinary and necessary expense of the business under § 162(a). The payer has nothing to deduct. Whether the owner can still leave the payment out of income is not settled on any page read for this Guide: Pub. 542 says that where rent is unreasonably more than the shareholder would charge a stranger, "the excessive part of the rent may be treated as a distribution to the shareholder" (Pub. 542), and a payment for a day with no business use is not plainly rent. Refer (see the last section).

The 14-day count: what counts as a day

The limit is on days "actually rented" in the tax year (§ 280A(g)). Rules for the count:

• Count all renters. The statute counts the days the dwelling unit is actually rented, not the days rented to the business. Nights on a short-stay platform, a film shoot, a weekend let to a neighbour's relatives: all count toward the same total.
• Days rented below a fair rent. Section 280A(g) says "actually rented", not rented at a fair rental. For the residence test, § 280A(d)(2)(C) treats a day as personal use "unless for such day the dwelling unit is rented for a rental which, under the facts and circumstances, is fair rental" (§ 280A(d)(2)). No page read says whether such a day also counts toward the 15. This Guide counts every rented day toward the 15, which is the cautious reading.
• It is a cliff. At 15 or more rental days, § 280A(g) does not apply at all for that year. All the rent, including the business rent, is then income under the ordinary rental rules, and expenses are divided between rental and personal use (Pub. 527). The statute gives no partial exclusion.
• Per tax year, per dwelling unit. The count restarts each tax year. A second home is a separate dwelling unit with its own count and its own residence test.
• Part days. The statute counts days and does not say how an afternoon meeting is counted. Treat any day on which the unit is rented, for any part of the day, as one rental day. This Guide does not rely on hours.
• Days available but not rented do not count. The IRS says a day the unit is available for rent but not actually rented is not a day of rental use (Pub. 527).

The business side: ordinary, necessary, and a fair rent

The owner's exclusion does not make the business payment deductible. Section 162(a) allows "all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business" (§ 162(a)). For each rental day the file should show why the business needed a meeting space that day, why it met at the home, and what happened there.

Fair rent is the amount the evidence must support. The IRS describes a fair rental price as generally the amount of rent that a person who is not related to you would be willing to pay, and says the rent is not a fair rental price if it is substantially less than the rents charged for other similar properties in your area (Pub. 527). Pub. 527 asks, when comparing another property with yours: is it used for the same purpose, approximately the same size, in approximately the same condition, with similar furnishings, in a similar location? If any answer is no, the properties probably are not similar (Pub. 527). Compare the home with meeting or event space that offers what the home actually offered on that day (capacity, rooms, equipment, catering if included), not with a ballroom.

Rent set too high has its own risk for a corporation. If a corporation rents property from a shareholder and the rent is unreasonably more than the shareholder would charge a stranger for use of the same property, the excessive part of the rent may be treated as a distribution to the shareholder (Pub. 542). Pub. 542 is written for corporations generally; how an S corporation should treat an excess is a question for the adviser (see "When to refuse or refer").

Related-party optics

Every Augusta arrangement is between a business and the person who controls it. The owner signs both sides. So the paperwork the owner writes (a lease, an invoice) shows that money moved; it does not show that the business needed the day or that a stranger would have paid the rent. Those are the two § 162 questions, and Pub. 542 measures rent against what the shareholder "would charge to a stranger" (Pub. 542). Evidence made by people other than the owner (venue quotes, attendees) carries the weight. For an S corporation the rent is not a substitute for the owner's salary: reasonable compensation is a separate test, covered in us-s-corp-election-decision.

The home office conflict

Section 280A(a) disallows deductions for a dwelling unit used as a residence by an individual or an S corporation, except as the section provides (§ 280A(a)). The home office exception in § 280A(c)(1) applies only to the portion of the home "exclusively used on a regular basis" as the principal place of business, as a place to meet patients, clients or customers, or as a separate structure used in the business (§ 280A(c)(1)). Three conflicts follow:

• A room used for meetings and for family life is not exclusively used for business. The IRS says you do not meet the exclusive use test if you use the area for both business and personal purposes (Pub. 587). The Augusta rental does not create a home office deduction for the rooms used.
• Ongoing rent of a home office to the owner's own corporation. Section 280A(c)(6) says the home office and rental exceptions in (c)(1) and (c)(3) do not apply to any item attributable to the rental of the dwelling unit, or a portion of it, by the taxpayer to his employer during any period in which the taxpayer uses it in performing services as an employee of the employer (§ 280A(c)(6)). So a shareholder-employee who charges the corporation monthly rent for a home office gets no home office or rental deductions for that space. Section 280A(c)(6) does not by itself touch the exclusion, because § 280A(g) applies "notwithstanding any other provision of this section". The risk is the day count: on this Guide's reading, every day of that office rent is a day the unit is "actually rented" and adds to the meeting days, so an ongoing monthly rent takes the home to 15 or more rental days and the § 280A(g) exclusion is lost for the year for the whole home. The statute writes "dwelling unit (or any portion thereof)" in § 280A(c)(6) and "such unit (or portion thereof)" in § 280A(d)(1), but only "such dwelling unit" in § 280A(g); whether renting one room is the unit being "actually rented" is not settled on the pages read, and this Guide treats it as counting (§ 280A(g)).
• One route for an S corporation owner's home office is a reimbursement from the corporation under an accountable plan, not rent. See us-hiring-your-children-and-accountable-plans.

Form 1099-MISC

A corporation or partnership that pays rent in the course of its trade or business files Form 1099-MISC, box 1, for "all types of rents" that reach the threshold in the table below, including "Real estate rentals paid for office space" (Instructions for Forms 1099-MISC and 1099-NEC). The instructions list payments generally made to a corporation as not reportable; that exception does not help here, because the payee is the individual homeowner. The instructions do not mention section 280A(g), and nothing in them excuses a payer because the payee may exclude the rent.

Item	Value	Note
Source	all figures below	https://www.irs.gov/pub/irs-drop/rp-25-32.pdf
Form 1099-MISC (section 6041(a)) reporting threshold for payments made after 31 December 2025	USD 2,000	"For payments made after December 31, 2025, the base threshold under section 6041(a) is $2,000"; adjusted for inflation for returns filed in 2027

The owner who receives a Form 1099-MISC for excluded Augusta rent still leaves it out of income under § 280A(g)(2) (Pub. 527). No IRS page read for this Guide says how to show the excluded amount on the owner's return so that the IRS matching program does not flag the form. Keep the file that proves the day count.

Worked examples (all hypothetical)

Example 1, the ordinary case. Dana owns all the shares of an S corporation and lives in her house all year. The corporation holds six planning and training days at the house, with eight staff attending each. Before the first event Dana's adviser collects three written quotes from local venues for a room for eight with a screen and lunch: USD 1,400, USD 1,500 and USD 1,700 a day (Pub. 527 on comparable rents). The corporation pays USD 1,500 a day. Six days times USD 1,500 is USD 9,000 (§ 280A(g)). The house is rented to no one else that year. Result: the corporation deducts USD 9,000 if each day was an ordinary and necessary business expense (§ 162(a)); Dana excludes USD 9,000 from income; the corporation issues Dana a Form 1099-MISC because the total reaches the threshold in the table above (Instructions for Forms 1099-MISC and 1099-NEC).

Example 2, the boundary. Same facts, but Dana also lets the house on a short-stay platform for 10 days in August. Rental days are 6 plus 10, which is 16. That is not less than 15, so § 280A(g) does not apply for the year (§ 280A(g)). The USD 9,000 from the corporation and the platform rent are both rental income under the ordinary rules, with expenses divided between rental and personal days (Pub. 527). The corporation's deduction is unaffected. With 8 platform days instead of 10, the count is 14 and the exclusion applies to all the rent, the platform rent included.

Example 3, the exclusion. Sam is a sole proprietor and owns his home. He moves USD 9,000 from the business account to his personal account and labels it "rent for six meetings". There is no deduction: Sam holds title to the home, and the rent deduction named in § 162(a)(3) is for "property to which the taxpayer has not taken or is not taking title or in which he has no equity" (§ 162(a)(3)). There is no separate payer and no income to exclude. The answer is the same if Sam's business is a single-member LLC that has not elected corporate tax treatment (IRS: single-member LLCs).

Example 4, rent set too high. Lee owns a C corporation. It pays Lee USD 3,000 a day for five meeting days at Lee's home. Five days times USD 3,000 is USD 15,000. Lee's own quotes show similar space at USD 1,500 a day, so a fair rent for five days is USD 7,500, and the excess is USD 15,000 minus USD 7,500, which is USD 7,500. That excess may be treated as a distribution to Lee rather than as rent (Pub. 542). Whether the corporation can deduct the fair part depends on § 162 as in Example 1 (§ 162(a)).

Records that prove each test

Section 6001 requires every person liable for tax to keep the records the Secretary prescribes, and lets the IRS require records sufficient to show whether a person is liable for tax (§ 6001). No IRS page lists records for this rule. Keep one file per year that proves each test above:

• Business purpose (§ 162): for each day, an agenda, an attendee list with each attendee's role, and minutes or notes of what was decided or taught. For a corporation, a board resolution or minutes approving the arrangement.
• Fair rent: the comparable quotes, dated before the event, from venues similar in purpose, size, condition, furnishings and location (the Pub. 527 questions above), and a note of why the chosen rate fits.
• Payment: an invoice from the owner to the business for each event, payment from the business bank account to the owner's personal account, and the business's books showing the expense.
• Day count: a calendar of every day the home was rented to anyone in the year, including platform bookings.
• Residence: evidence the home was the owner's residence that year (for a main home this is rarely in doubt; for a second home, a personal-use day log).
• Form 1099-MISC issued by the payer, when the threshold is reached.

Ask the client first

• How is the business taxed: sole proprietor, single-member LLC (disregarded or electing corporation), partnership, S corporation or C corporation? Who owns the home?
• On how many days this year will the home be rented to anyone, including short-stay platforms, family lets and the business?
• What business events will take place at the home, who will attend, and why at the home rather than at the office or a venue?
• What would a similar venue charge for the same use, and can you get dated quotes before the first event?
• Does the business already pay you rent or a reimbursement for a home office, and is any room claimed as exclusively used for business?
• Is the home your main home, a second home, or a property you also rent out during the year?

When to refuse or refer

• Refuse to set up the arrangement for a sole proprietor or a disregarded single-member LLC: it produces no deduction (Example 3).
• Refuse to backdate minutes, invoices or quotes, or to write minutes for a meeting that did not take place.
• Refer to an adviser when the payer is an S corporation and the rent is unreasonably more than a fair rent; when a partnership pays a partner and the arrangement could be a guaranteed payment or a disguised payment under § 707; when the home is owned by a trust, a spouse alone, or an entity; or when the owner also rents a home office to the business; or when the business paid for a day with no real business use.
• Refer when the home is a second home, or is also rented at other times, so that the residence test or the day count is close: use us-real-estate-professional-and-short-term-rentals for the ordinary rental rules.
• State tax: states decide for themselves whether to follow § 280A(g), and some may tax rent the federal return excludes. Refer to the state's own rules; this Guide is federal only.
• For other 2026 federal changes, including the higher Form 1099 threshold, see us-2026-federal-tax-changes.

Sources

• Internal Revenue Code § 280A, LII mirror of the U.S. Code: https://www.law.cornell.edu/uscode/text/26/280A
• Internal Revenue Code § 162, LII mirror of the U.S. Code: https://www.law.cornell.edu/uscode/text/26/162
• Internal Revenue Code § 707, LII mirror of the U.S. Code: https://www.law.cornell.edu/uscode/text/26/707
• Internal Revenue Code § 6001, LII mirror of the U.S. Code: https://www.law.cornell.edu/uscode/text/26/6001
• IRS Publication 527 (2025), Residential Rental Property: https://www.irs.gov/pub/irs-pdf/p527.pdf
• IRS Topic 415, Renting residential and vacation property: https://www.irs.gov/taxtopics/tc415
• IRS Publication 542 (1-2024), Corporations: https://www.irs.gov/pub/irs-pdf/p542.pdf
• IRS Publication 587 (2025), Business Use of Your Home: https://www.irs.gov/pub/irs-pdf/p587.pdf
• IRS, Single member limited liability companies: https://www.irs.gov/businesses/small-businesses-self-employed/single-member-limited-liability-companies
• Instructions for Forms 1099-MISC and 1099-NEC (Rev. December 2026): https://www.irs.gov/pub/irs-pdf/i1099mec.pdf
• Rev. Proc. 2025-32: https://www.irs.gov/pub/irs-drop/rp-25-32.pdf