The Augusta Rule (IRC §280A(g)) for Freelancers: 2026 14-Day Home Rental Guide

Published: May 12, 2026 · Reading time: 10 min

TL;DR: The Augusta Rule — IRC §280A(g) — lets you rent your personal residence for up to 14 days per year tax-free. Business owners with an S-corp, multi-member LLC, or C-corp can rent their home to their business for board meetings, retreats, workshop filming, or client events. The business deducts the rent as an ordinary expense; the owner personally excludes the income. Net result: a fully legal $5,000–$30,000+ deduction with zero personal tax on the offsetting income. Solo Schedule C sole proprietors generally can't use it directly — they are the business — but can capture similar savings via the home office deduction on Line 30, or by electing S-corp status first.

The Augusta Rule is the most-loved tax-planning technique you've probably never heard of — and the one most often executed badly. Done right, it's a fully-legal way to shift money from your business to your personal account with zero income tax on either side. Done sloppily, it triggers IRS recharacterization, back taxes, and penalties.

This guide explains exactly when the rule applies, who benefits, the documentation that survives an audit, and why most solo freelancers need to structure differently to use it.

What IRC §280A(g) Actually Says

The Internal Revenue Code provision is short:

§280A(g) Special rule for certain rental use. Notwithstanding any other provision of this section or section 183, if a dwelling unit is used during the taxable year by the taxpayer as a residence and such dwelling unit is actually rented for less than 15 days during the taxable year, then — (1) no deduction otherwise allowable under this chapter because of the rental use of such dwelling unit shall be allowed, and (2) the income derived from such use for the taxable year shall not be included in the gross income of such taxpayer.

In plain English:

• You can rent your home for up to 14 days per year
• The rental income is excluded from gross income (you don't pay tax on it)
• You can't deduct rental-related expenses against that income (you weren't going to, anyway)
• The home must be used by you "as a residence" for the rest of the year

The 14-day cap is per calendar year, not per event. Twelve one-day events + one two-day event = 14 days exactly. One 15-day rental blows the whole exclusion and the entire amount becomes taxable rental income.

Who Benefits and Who Doesn't

Beneficiaries (the rule works for them)

• S-corp owner-operators — single-shareholder S-corps are the classic use case. The S-corp deducts the rent; the owner excludes the income. Pure win.
• Multi-member LLCs taxed as partnerships — the partnership deducts; each member excludes their share of the personal-side income (assuming each personally meets the 14-day rule for their respective residence).
• C-corp owners — same mechanic; C-corps need it less because of the lower 21% corporate rate, but it still works.

Non-beneficiaries (the rule doesn't help directly)

• Sole proprietors filing Schedule C — you ARE the business. Paying yourself rent yields a Schedule C deduction and matching Schedule E income; the §280A(g) exclusion eliminates the income side, but tax-transparency means the IRS has long held that this round-tripping doesn't produce a real net deduction. The conservative position: don't try it as a Schedule C sole proprietor.
• Single-member LLCs taxed as disregarded entities — federal tax law treats them as Schedule C sole props. Same result.
• Renters — if you rent (don't own) your residence, you have no property to rent out. The rule needs ownership.

The Mechanic for an S-corp Owner

A simplified example for a single-shareholder S-corp:

Crucially, the rent does NOT pass through to your K-1 as ordinary income — the S-corp's profit drops by $9,000, your K-1 income drops by $9,000, and your personal Schedule E shows $9,000 of receipts that §280A(g) excludes.

What a Legitimate Business Event Looks Like

The IRS isn't fooled by a "board meeting" that was actually Sunday football. Bona fide examples:

• Quarterly board meeting — even a single-shareholder S-corp must hold them; document with agenda, minutes, and resolutions
• Annual strategic-planning session — bring in your CPA, key contractors, attorney
• Recorded workshop filming — set up the living room as a film studio for course content
• All-hands retreat — invite the 1099 contractors and remote team members you regularly work with
• Client-appreciation dinner — top clients only, with business purpose documented
• Photo/video shoot for marketing — shoot brand or product content; track creative deliverables produced

What doesn't count: working from home alone, ordinary client calls, a one-off dinner with one client, watching a webinar.

The Documentation Checklist (Save These Permanently)

For each Augusta Rule rental day:

• Written rental agreement signed BEFORE the event by you (as homeowner) and the entity (as renter)
• FMV documentation — 3 written quotes from local hotels or venues for comparable space
• Board resolution or written consent authorizing the rental
• Meeting agenda distributed in advance
• Attendance record with sign-in
• Minutes or recap notes within 7 days
• Photos or video if the event was filmed or had visual deliverables
• Payment from the business bank account to your personal account (ACH or check — never cash)
• Form 1099-MISC issued by the business by January 31 if total annual rent is $600+
• Schedule E on your personal return showing the receipts and the §280A(g) exclusion line

Skip any one of these and the IRS has a thread to pull. With the full set, the rule survives examination routinely.

Why Schedule C Filers Should Care Anyway

If you're a Schedule C sole proprietor today, you can't use the Augusta Rule directly. But two related strategies often produce comparable savings:

1. Elect S-corp status

Once your Schedule C net profit exceeds ~$50,000, an S-corp election often pays for itself by reducing self-employment tax on the distribution portion. Once you're an S-corp, the Augusta Rule becomes available. See Schedule C Audit Triggers for related considerations and consult a CPA before electing.

2. Maximize the home office deduction

The home office deduction on Schedule C Line 30 is the sole proprietor's parallel benefit:

• Simplified method: $5/sq ft × business-use square footage, capped at 300 sq ft / $1,500
• Actual method: Form 8829 prorates rent or mortgage interest, utilities, insurance, internet, and depreciation by business-use percentage

For a typical 200 sq ft home office in a 1,500 sq ft home with $24,000/year housing cost, the actual method often produces a $3,200/year deduction — comparable to a small-scale Augusta Rule benefit, available to sole proprietors, and far simpler.

3. Pair both once you're an S-corp

An S-corp owner can claim both a home office reimbursement (via accountable plan) AND the Augusta Rule, as long as the home office space is used regularly and exclusively, and the Augusta Rule rentals are on separate days for different business purposes.

The Top 5 Augusta Rule Mistakes

1. Charging $5,000/day on a $300K home in a small town — FMV is determined by local comparables; inflate it and the IRS will reset it to actual FMV and tax the excess as compensation
2. Holding 15+ days of rental — exceeds the 14-day cap; the entire year becomes taxable
3. No business purpose — "I worked from home" doesn't qualify
4. Trying it as a Schedule C sole proprietor — round-tripping payments to yourself produces no net deduction
5. Skipping the 1099-MISC — if the business paid $600+ in rents to you personally, the form is required by January 31

A Realistic Tax-Savings Picture

A single-shareholder S-corp owner with $250,000 of profit who holds 4 board meetings, 1 strategy retreat, and 2 workshop-filming days at home (total 10 days):

That's $3,840 of real after-tax money for documentation work that takes 2–3 hours per event.

Authoritative References

• IRC — §280A(g): Disallowance of certain expenses in connection with business use of home, rental of vacation homes, etc.
• IRS — Publication 527: Residential Rental Property
• IRS — Topic 414: Rental Income and Expenses
• IRS — Publication 535: Business Expenses
• IRS — Form 1099-MISC Instructions
• Tax Court — Sinopoli v. Commissioner (T.C. Memo. 2023-105) — cautionary precedent on inflated FMV and weak documentation

The Augusta Rule is one of the cleanest, most legal tax-planning tools in the code — and one of the easiest to lose to bad documentation. If you're at a profit level where it matters (typically $80,000+ in S-corp net), pair it with a real CPA before the first event of the year.

For broader tax-planning strategies, see QBI Deduction for Freelancers, Section 179 Deduction Explained, and Self-Employment Tax Explained.