Can LLCs Use the Augusta Rule? – Unlock a Hidden Tax Break for Home Rentals + FAQs

Lana Dolyna, EA, CTC

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Confused about whether your LLC can use the Augusta Rule under U.S. law? You’re not alone. According to a 2023 small business tax survey, over 70% of small business owners face unnecessary tax bills each year simply because they miss out on key deductions like the Augusta Rule.

This little-known tax provision could save your business thousands, but only if you use it correctly. Below, we’ll dive into whether LLCs can take advantage of the Augusta Rule, explain all the key terms, walk through detailed examples (with charts for clarity), present evidence from the tax code, compare this strategy to other tax breaks, and highlight things to avoid. By the end, you’ll have a Ph.D.-level understanding of this topic – in plain English.

Can LLCs Use the Augusta Rule? Yes—Here’s What to Know

The short answer: Yes, an LLC can use the Augusta Rule to get tax-free rental income legally. The Augusta Rule (Section 280A(g) of the IRS code) allows homeowners to rent out their personal residence for up to 14 days per year without having to report that rental income for taxes. In other words, if your LLC rents your home for business purposes (like meetings or events) for 14 or fewer days in a year, you, the homeowner, don’t pay tax on that income. Meanwhile, your LLC can deduct the rental payments as a business expense. It’s a perfectly legal tax strategy often dubbed a “14-day home rental loophole” or the “Masters exception.”

Why does this rule exist? It originated in Augusta, Georgia – homeowners there would rent out their houses during the Masters golf tournament. The tax code essentially said such short rentals are too minor to bother taxing. While meant for events like the Masters, the law applies to any personal residence in the U.S.. That means your LLC can rent your home (or another owner’s home, or a vacation home you own) for legitimate business activities up to 14 days/year, and neither the LLC owners nor the company will owe income tax on the rent.

However, there are important conditions and best practices:

Business Purpose: The rental must be for a genuine business purpose. Common legitimate uses include board meetings, strategy sessions, employee training days, client receptions, or company retreats held at the home. It can’t just be a vacation or purely personal gathering in disguise.
Fair Market Rate: The rent charged must be reasonable and at fair market value. You should charge a similar rate to what it would cost your LLC to rent a comparable meeting space or event venue in your area. You can’t wildly overcharge your own company to funnel tax-free money to yourself—that would likely draw IRS scrutiny.
14-Day Limit: Stay at or below 14 days of rental use per year. If you rent the home out for even one day more (15 days or more), the Augusta Rule does not apply at all (we’ll discuss what happens in that case later). Fourteen is the magic number for this to work.
No Partial Use Deductions by Homeowner: When you use the Augusta Rule, as the homeowner you can’t deduct expenses related to those rental days (like utilities or depreciation) on your personal taxes. But that’s usually no problem—the tax-free income more than makes up for not deducting a small portion of your home expenses.

In summary, an LLC can absolutely leverage the Augusta Rule. It’s a clever way to transfer money from the business to the owner(s) tax-free, as long as it’s done properly. Next, we’ll clarify some terms and then dive into examples to show how it works in practice.

Key Terms: LLCs, the Augusta Rule & Other Tax Jargon Decoded

Understanding a few key terms will help clarify how and why the Augusta Rule works for LLCs:

LLC (Limited Liability Company): A business entity that provides liability protection to its owners (called members) and is typically taxed as a “pass-through” (meaning business profits pass through to owners’ personal tax returns, unless the LLC elects to be taxed as a corporation). An LLC can enter contracts (like a rental agreement) separate from its owners. This separation is why your LLC can rent your personal property – the LLC is a distinct entity paying you as the homeowner.
Augusta Rule (14-Day Rule, IRS Section 280A(g)): A nickname for a provision in U.S. tax law allowing homeowners to rent out their personal residence for up to 14 days per year without reporting the income. Any rent earned in those 14 days is tax-free to the homeowner. The trade-off is the homeowner can’t deduct any expenses related to that rental period. It’s called the Augusta Rule because it became famous in Augusta, GA, but it applies nationwide.
Section 280A(g): The section of the Internal Revenue Code that contains the Augusta Rule. It specifically states that if a dwelling unit (house, apartment, etc.) is rented for not more than 14 days in a year, the rent income “shall not be included in gross income” (and none of the rental expenses are deductible). This is the legal backbone for the Augusta Rule strategy.
Fair Market Value (FMV) Rent: The typical rate that an unrelated party would pay to rent a similar space under similar conditions. When your LLC rents your home, the IRS expects the rent amount to be in line with FMV. For example, if conference rooms in your city rent for $500 per day, you should charge your LLC around $500 (not $5,000) for a day’s use of your home for a meeting.
Business Expense Deduction: An ordinary and necessary expense paid by the business that can reduce its taxable income. Rent paid for a legitimate business event is a deductible expense. Your LLC can deduct the rent it pays to you (the homeowner) as a business expense, just like it would if it rented a hotel conference room. This reduces the LLC’s taxable profit.
Pass-Through Taxation: Many LLCs are taxed on a pass-through basis, meaning the LLC’s profits are reported on the owners’ personal tax returns (as in a sole proprietorship or partnership). In this scenario, a rent expense effectively lowers the owners’ taxable business income. Important: If you are a single-member LLC without electing S-Corp status, the IRS views you and the LLC as the same taxpayer for income tax purposes (disregarded entity). In practice, this can complicate the Augusta Rule strategy – you can’t really have a contract with yourself. To use the Augusta Rule most cleanly, many advisors recommend the LLC be treated as a separate taxpayer (e.g., an S-Corp or multi-member LLC) so that the transaction is clearly between two different entities (company and individual).
Home Office Deduction: A different tax provision that lets those who work from home deduct a portion of household expenses (like rent, mortgage interest, utilities) proportional to a home office space. This is separate from the Augusta Rule. The Augusta Rule deals with short-term rental of the entire residence for specific days, whereas the home office deduction covers ongoing business use of part of the home. It’s possible to use both in some cases (for example, deduct a home office year-round and rent a different part of your home to your LLC occasionally), but you must be careful not to overlap or double-dip for the same space and time.

With these terms in mind, let’s see how an LLC owner might actually use the Augusta Rule in real life. Below are three common scenarios to illustrate the possibilities and limits of this tax break.

Detailed Examples: 3 Real-World Scenarios of LLCs Using the Augusta Rule

To make the Augusta Rule concrete, let’s explore three scenarios where an LLC owner attempts to use it. We’ll see how the numbers play out in each case and include a visual for each scenario to break down the outcomes.

Scenario 1: Monthly Strategy Meetings at the Owner’s Home (Optimal Use)

Situation: Alice is the sole owner of an LLC consulting business. She decides to host a monthly strategy meeting and team brainstorming session at her home, which doubles as an informal “retreat” away from the office. She rents her home to her LLC for 1 day each month for these meetings, totaling 12 days in the year (well under the 14-day limit).

Fair Rent: Alice determines a fair market daily rental rate by checking local venue prices. Comparable meeting space rentals cost about $1,000 per day in her area. She documents this with printouts from local conference center websites. So, her LLC pays her $1,000 for each meeting day.

Tax Outcome: Over the year, Alice’s LLC pays her $12,000 in rent (12 days × $1,000/day). Her LLC deducts that $12,000 as a business expense, which reduces its taxable income by that amount. Alice (as the homeowner) does not have to report the $12,000 as rental income on her personal tax return, thanks to the Augusta Rule. It’s completely tax-free income to her.

To illustrate the benefit, let’s say Alice’s combined federal and state tax rate on her business income is around 30%. By shifting $12,000 of profit to a rent expense, she saves roughly 30% of $12,000 in taxes — about $3,600 saved. And she personally pockets the full $12,000 from her LLC with no tax due on it. It’s a win-win.

Illustration: The table below summarizes Scenario 1:

Scenario 1: Monthly Meetings	Details
Days Rented to LLC (per year)	12 days
Rent Charged per Day	$1,000
Total Rent Paid by LLC	$12,000
Income Reported by Owner?	No – Tax-Free (under 14-day rule)
Deduction for LLC	$12,000 business expense
Benefit	Owner gets $12k tax-free; LLC’s taxable income is $12k lower (saving ~$3.6k in taxes at 30% rate).

In this optimal scenario, 100% of the rental income goes to Alice, and 0% goes to taxes. The Augusta Rule effectively lets her extract $12,000 from her company tax-free.

To visualize the advantage, consider what would happen without the Augusta Rule: Alice’s $12,000 would simply stay as business profit (or be distributed as salary/dividend) and she’d pay tax on it. At a 30% rate, that’s roughly $3,600 to the IRS, leaving only $8,400 in her pocket. With the Augusta Rule, she keeps all $12,000. The difference is stark:

<div style=”display: flex; justify-content: space-around; width: 350px; margin-top: 1em;”> <div style=”text-align:center;”> <div style=”background-color: #4CAF50; width: 50px; height: 105px;”></div> <p style=”font-size:0.9em;”>No Augusta<br><strong>$8,400</strong></p> </div> <div style=”text-align:center;”> <div style=”background-color: #2196F3; width: 50px; height: 150px;”></div> <p style=”font-size:0.9em;”>With Augusta<br><strong>$12,000</strong></p> </div> </div>

(Above: Bar chart comparing approximate after-tax income from $12k business profit if taxed (~$8.4k net) versus using Augusta Rule ($12k net).)

As shown, Alice’s strategy meetings allow her LLC to use the Augusta Rule to the fullest advantage: she stays under 14 days and documents a fair rental rate.

Scenario 2: One-Time Company Event – Using a Few Days (Partial Use)

Situation: Bob and Carol are co-owners of an LLC (a marketing agency). They host an annual 2-day offsite retreat at Carol’s country home to plan the next year’s strategy. They rent the home to their LLC for those 2 days.

Fair Rent: A similar rural conference venue might cost $2,000 per day. They decide on $2,000/day as the rental rate. So for 2 days, the LLC pays $4,000 total rent to Carol (the homeowner).

Tax Outcome: The LLC deducts the $4,000 as a business expense. Carol does not report any of that rent as income personally. Even though they only used 2 of the 14 available days, it qualifies (still under the limit). The tax benefit is smaller than scenario 1 but still nice: at say a 30% tax rate, $4,000 of expense saves about $1,200 in taxes the LLC would have owed on that profit, and Carol enjoys $4,000 tax-free.

This scenario shows that even occasional use of the Augusta Rule can be beneficial. You don’t have to use all 14 days – even 1 or 2 days of rental to your business can yield tax-free income and reduce your business taxes. Many small businesses might only have a few eligible events per year (like an annual meeting or holiday party), but it’s still worth doing.

Illustration: In Scenario 2, the breakdown would be:

Days rented: 2 days (under limit).
Rent paid: $4,000 total.
Owner’s rental income reported: $0 (tax-free).
LLC deduction: $4,000.
Benefit: Carol keeps $4k with no tax; LLC lowers taxable income by $4k (saving maybe $1.2k at 30%).

We can visualize the tax split if this $4,000 were taxed vs tax-free. Normally, with a 30% tax rate, about $1,200 would go to taxes and $2,800 to the owner. Using Augusta, the full $4,000 goes to the owner. The pie charts below illustrate this difference:

<div style=”display:inline-block; text-align:center; margin: 1em;”> <div style=”width:100px; height:100px; border-radius:50%; background:conic-gradient(#4CAF50 0% 70%, #F44336 70% 100%); margin: 0 auto;”></div> <p style=”font-size:0.9em; max-width:120px; margin: 0 auto;”><strong>Normal Taxation</strong><br><span style=”color:#4CAF50;”>70% Owner</span>, <span style=”color:#F44336;”>30% IRS</span></p> </div> <div style=”display:inline-block; text-align:center; margin: 1em;”> <div style=”width:100px; height:100px; border-radius:50%; background:conic-gradient(#4CAF50 0% 100%, #F44336 0% 0%); margin: 0 auto;”></div> <p style=”font-size:0.9em; max-width:120px; margin: 0 auto;”><strong>With Augusta Rule</strong><br><span style=”color:#4CAF50;”>100% Owner</span>, <span style=”color:#F44336;”>0% IRS</span></p> </div>

(Above: Pie charts showing who gets the $4,000. Left: normally ~30% would go to IRS. Right: with Augusta Rule, 0% to IRS, all to owner.)

Even with just a couple of days of rental, Bob and Carol see a clear benefit. They effectively gave themselves a tax-free bonus $4,000 for the year by hosting that retreat at home.

Scenario 3: Going Over the 14-Day Limit (What Happens if You Exceed It)

Situation: Diane has a multi-member LLC and owns a large home. She aggressively tries to use this strategy by renting her home to her LLC for 16 days in a year (maybe hosting many client events and team meetings). This exceeds the 14-day limit by 2 days.

Fair Rent: Suppose she charged a modest $500 per day. For 16 days, the LLC paid her $8,000 in rent.

Tax Outcome: This scenario backfires. Because the home was rented for more than 14 days, the Augusta Rule does NOT apply at all. All the rental income is now taxable to Diane. She must include the entire $8,000 as rental income on her personal taxes.

Now, since it’s more than 14 days, the situation converts to a typical rental: Diane could deduct certain prorated expenses (utilities, etc.) related to those 16 days of rental use. However, given it’s her personal home, she likely has predominantly personal use of the home, making it a “mixed-use” or vacation home scenario under tax law. The IRS limits the deductions in such cases (she can’t create a tax loss from renting to herself). In practice, the $8,000 becomes mostly taxable profit on her personal return, except maybe a small offset for expenses.

The LLC still deducts the $8,000 it paid as a business expense. But consider the net effect: the LLC’s deduction saved perhaps $2,400 in taxes (if in a 30% bracket), but Diane now owes roughly $2,400 in tax on the $8,000 income (at her ~30% rate). They cancel out. No net tax savings for the overall family, and just a lot of paperwork.

In fact, it could be worse: if Diane’s personal tax rate is higher than the LLC’s, she might pay more tax on the rental income than the LLC saved. Plus, going over the limit could raise a red flag, prompting IRS scrutiny on the rental arrangement.

Illustration: The key point of Scenario 3 is that 15 or more rental days voids the Augusta Rule benefits. The graph below conceptually shows how the tax-free benefit rises as you approach 14 days, then drops off if you go beyond:

(Above: A conceptual line chart. Tax benefit increases up to day 14 (peak), then collapses after day 14. Staying at or under 14 days yields full benefit; beyond 14 days yields zero tax-free benefit.)

As you can see, day 14 is the sweet spot – any rentals up to that point can be tax-free. The moment you hit day 15, the special treatment vanishes.

Lesson from Scenario 3: Avoid the temptation to overuse this rule. Even one day too many can nullify the benefit. Diane would have been better off stopping at 14 days. It’s a strict cutoff.

These scenarios highlight three common ways LLC owners approach the Augusta Rule:

Stay well under 14 days with regular meetings/events – optimal tax benefit.
Use a few days for a special event – partial but worthwhile benefit.
Accidentally (or intentionally) exceed the limit – lose the benefit entirely.

Most successful uses will look like Scenario 1 or 2: occasional or periodic use, documented, and within the 14-day cap. Now, let’s look at the evidence supporting this strategy and how it compares to other options.

Evidence from the Tax Code (Proof It’s 100% Legal)

For those skeptical that this sounds “too good to be true,” here’s the foundation in the tax law. The IRS code itself explicitly allows this. The relevant text is in 26 U.S. Code § 280A(g), often quoted as:

IRC 280A(g): If a dwelling unit is used during the taxable year by the taxpayer as a residence and is rented for less than 15 days during the taxable year, then the income derived from such use for the taxable year shall not be included in gross income… and no deduction otherwise allowable… shall be allowed with respect to such use.

In plain language: rent your home for 14 or fewer days = don’t count that rent as income (and don’t deduct expenses). This is exactly what we’ve been discussing. There is no restriction in that law on who the home is rented to. It doesn’t say “except if you rent to your own company.” The rule applies regardless of whether you rent to a stranger, a friend, or your own LLC. The key conditions are it’s your personal residence and rented under 15 days total.

Tax professionals and court cases: Tax experts widely acknowledge this as a legitimate strategy. While relatively few court cases directly reference the Augusta Rule (because it’s straightforward when followed), the consensus in the tax community is that renting your home to your business is permissible under these rules. The critical factor is that the rent amount and business purpose must stand up to scrutiny (so it’s not an abusive attempt to funnel excessive money tax-free).

Even the IRS, in its publications, describes the 14-day rule for personal residences. For example, IRS Publication 527 (Residential Rental Property) notes that if you **rent out your home for short periods under 15 days, you do not report the income at all. This aligns perfectly with what we’re doing by having the LLC rent the home.

Why no specific ban on related-party rentals in this context? Normally, tax laws are wary of transactions between related parties (like you and your own company). But Section 280A(g) makes no distinction – likely because Congress anticipated scenarios like the Masters tournament rentals where it didn’t matter who the renter was, just that it was a short duration. The absence of a related-party exception is a green light for savvy business owners.

That said, common sense and general tax anti-abuse principles still apply. If the IRS were to see a wildly inflated rent or sham “meetings” that are clearly not for business, they could invoke other provisions (like denying a deduction for lack of business purpose, or recharacterizing the transaction). Stick to the letter and spirit of the law: real business use, fair rent, proper documentation.

In summary, the evidence is clear: The Augusta Rule exists in black-and-white in the tax code, and nothing prohibits an LLC from using it. It’s a legal tax break, not a loophole born of ambiguity. Now, let’s compare this strategy to some other common home-related tax approaches to see how it stacks up.

Comparing the Augusta Rule vs. Other Tax Strategies

How does using the Augusta Rule (renting your home to your LLC) compare to other ways of handling home-business expenses or extracting profits from your business? Here are a couple of key comparisons:

Augusta Rule vs. Home Office Deduction

Many LLC owners working from home take a home office deduction. How is that different?

What It Covers: The home office deduction allows you to deduct a portion of your home expenses (utilities, rent, mortgage interest, property taxes, depreciation, etc.) corresponding to a dedicated home office space used exclusively for business on a regular basis. In contrast, the Augusta Rule isn’t about an ongoing office use – it’s about short-term rental use of your home for specific events/days.
Limitations: Home office deduction is only available if you have a part of your home used solely for business (e.g., an office room) and it’s your principal place of business or used to meet clients, etc. The Augusta Rule has no such exclusive-use requirement; it could be your living room, yard, entire house used temporarily for a business function, even if that space is normally personal.
Tax Impact: Home office expenses reduce your business income (or are taken on Schedule C or Form 8829) but do not give you any tax-free income. They just save you some tax by lowering taxable income. The Augusta Rule actually transfers money to you tax-free. It’s more directly beneficial in that sense.
Duration: Home office is year-round (continuous use), Augusta Rule is max 14 days of use.
Can You Do Both? Potentially yes. For example, you might have a home office for your daily work (take that deduction) and a few times a year rent out your whole home to your LLC for larger meetings. The key is you can’t double-deduct the same costs. You wouldn’t, for instance, count the day of an Augusta Rule rental as a “home office” day for claiming home expenses. In practice, the home office deduction covers the pro-rata share of the home you use as an office continuously, whereas the Augusta rental days are just ignored from income (and you don’t deduct those days’ portion of expenses). It can be a bit complex to juggle, so consulting a tax professional is wise if you attempt both.

Which saves more? The Augusta Rule can often yield a larger break if your home is expensive to rent out. For instance, in Scenario 1, Alice got $12k tax-free. A home office deduction rarely would equal that much actual tax saved (home office might save a few thousand in taxes depending on expenses). Ideally, if eligible, a savvy business owner uses each where appropriate: home office for routine use and Augusta for special events.

Augusta Rule vs. Simply Taking More Profit/Distribution

If you want to get money out of your business, normally you’d:

Take a salary (if an S-Corp or C-Corp) – which is taxable to you and deductible to the company.
Or take a pass-through profit distribution (if an LLC/partnership) – which is just taxed as part of your business income.
Or take a dividend (if C-Corp) – which is taxed to you (and not deductible to company).

In all these cases, you end up paying tax on that money either as ordinary income or as dividends. The Augusta Rule method effectively creates a form of distribution that is tax-free to you and still deductible (as rent) to the company. That’s a rare combination (usually only things like certain retirement contributions or legitimate expense reimbursements can do that). It’s why the Augusta Rule is sometimes called a “tax loophole” – it lets you do what normally isn’t allowed: withdraw profit without tax.

However, unlike a regular distribution, you need to have a real event to justify the rent. You can’t just call a payment “rent” and not actually allow the company to use your home. So it requires some planning and formality.

Table: Augusta Rule vs Other Approaches

Here’s a quick comparison:

Aspect	Augusta Rule (Home Rental)	Home Office Deduction	Normal Distribution/Compensation
Money to Owner?	Yes – via rent payment	No direct payment (just lower personal expenses)	Yes – via salary/dividend/profit
Taxable to Owner?	No (if ≤14 days)	N/A (no payment; just expense offset)	Yes (salary taxed, distributions profits taxed)
Deductible to Business?	Yes (rent expense)	Yes (home expenses portion)	Salary: Yes; Distribution: No (for pass-through it’s just profit)
Limitations/Conditions	≤14 days; business purpose; fair rate	Exclusive & regular use of part of home; limits if income is low	Reasonable comp rules for salary; distributions can’t exceed profits etc.
Documentation Needed	Rental agreement, event logs, FMV justification, minutes	Home office proof (photos, floor plan, expense receipts)	For salary, W-2/payroll; for distributions, basic accounting of profits
Maximum Benefit Potential	Potentially high (up to market rent × 14 days tax-free)	Moderate (limited by % of home expenses)	Varies (no specific cap, but fully taxable)

As the table shows, renting your home to your LLC under the Augusta Rule can achieve something other methods can’t: transferring value to you completely tax-free. The trade-off is you have a strict time limit and the hassle of setting up those rental days legitimately.

Pitfalls and Things to Avoid When Using the Augusta Rule

While the Augusta Rule is a fantastic tool, there are several pitfalls to avoid. Missteps can lead to losing the tax benefit or worse, an IRS audit. Here are key things to NOT do when your LLC uses this rule:

❌ Renting for Too Many Days: This is the number one mistake. Do not exceed 14 rental days in a calendar year. Even 15 days blows the deal (as we saw in Scenario 3). Plan carefully and track the days. If you anticipate multiple events, count them up. It’s better to cap it at 14 or even a day or two less (to be safe) than accidentally hit 15.
❌ Lack of Documentation: Treat this like any business transaction. Don’t just verbally claim you had a meeting; document it! Create a written rental agreement between you (owner) and the LLC specifying the daily rate and purpose (you can draft a simple agreement yourself or have your LLC’s lawyer do it). Mark the days on a calendar. Keep meeting agendas, minutes, or event itineraries for each day the home was used. Take a photo of the team at the meeting as evidence it occurred. If the IRS ever inquires, you can present a paper trail showing it was legitimate.
❌ Unreasonable Rental Rate: Don’t get greedy by charging, say, $10,000 per day unless you can justify it. Overcharging your company beyond market rates is a red flag. The IRS can recharacterize excessive rent as a disguised distribution or disallow the portion that’s not reasonable. Research local venue rentals (conference centers, hotel meeting rooms, Airbnb rates for homes in your area) to support your chosen rate. Keep that research on file.
❌ Sham “Meetings” or Personal Events: The business use must be real. For example, naming your kid’s birthday party a “company morale event” and making the LLC pay rent for that likely won’t fly. Similarly, having your “board meetings” be just you and family members over dinner with no real business discussion will look suspicious. The IRS doesn’t need to accept a deduction if it finds no bona fide business purpose. Ensure the activities during those rental days are substantially business-related. If your LLC has a board of directors, invite them and actually discuss business. If it’s an employee training day, have a schedule of training. Substance over form is key.
❌ Mixing Up Personal & Business Use: If you rent your home to your LLC for a day, the entire home should be in use for the business during that day (or at least a significant portion). You as the owner should ideally vacate or stay in “business mode.” Don’t claim a rental day and then treat it like any other personal day at home. Also, keep finances separate: the LLC should pay you (ideally via check or bank transfer) just like it would pay any vendor. Don’t pay personal expenses directly out of the company account and call it “rent.”
❌ Forgetting Tax Reporting Nuances: As the homeowner, you do not report the short-term rent income on your 1040. Some people get confused and try to report it on Schedule E with an offsetting expense – that’s not how 280A(g) works. You simply exclude it entirely. On the LLC’s side, ensure the rent expense is properly recorded on the books and on the tax return (e.g., Schedule C or the S-Corp/partnership tax filing) as “Rent – other property” or a similar line item. Do not issue yourself a 1099 for that rent; since it’s not taxable to you, issuing a 1099-MISC could just confuse matters (though some companies do for recordkeeping – consult your CPA on the best practice).
❌ Assuming It’s Only for LLCs: If you ever switch business type or have multiple entities – note that any business entity can use this rule (S-corp, C-corp, partnership, etc.). It’s not exclusive to LLCs. LLCs are common for small businesses, hence the focus, but don’t think you lose this break if you operate as a corporation. The rules are the same. In a corporation scenario, you as a shareholder are renting your home to your company (just ensure corporate minutes reflect that meeting/event). The pitfalls above equally apply.
❌ Relying on Augusta Rule as a Primary Income Strategy: This should be a supplementary perk, not the core way you draw money out of your business. Over-reliance might lead to aggressive behavior that attracts attention. Use it within reason. Plan for at most 14 days of high-value meetings – which is plenty for most small businesses. If you find yourself wanting to do 30 or 40 days, you’re stretching beyond the intention of the rule and inviting trouble.

By avoiding these common mistakes, you can safely reap the benefits of the Augusta Rule. Countless savvy entrepreneurs use this strategy each year as a part of their tax planning. The key is to stay honest, reasonable, and within the clear boundaries of the law.

Before we wrap up, let’s address a few frequently asked questions that pop up online regarding LLCs and the Augusta Rule.

FAQ: Common Questions About LLCs and the Augusta Rule

Q: Can any LLC owner use the Augusta Rule?
A: Yes. Any homeowner who owns an LLC (or other business entity) can use the Augusta Rule, provided they have a legitimate business reason to rent their home to the business. The type of business entity doesn’t matter – what matters is you personally own a dwelling that you also allow your business to use for up to 14 days. Just remember, if your LLC is a single-member disregarded entity (for tax purposes you and the LLC are the same taxpayer), the arrangement should be especially well-documented. Many find it cleaner if the LLC is taxed as an S-Corp or partnership, but it’s not strictly required.

Q: Does the Augusta Rule only apply in Augusta, Georgia or for golf tournaments?
A: No. The rule got its nickname from Augusta, GA, but it is federal law applying throughout the United States. It’s not limited to any location or event. You can rent out your home anywhere in the U.S. for any event (sports, conferences, meetings, etc.) and qualify, as long as the 14-day limit and other conditions are met.

Q: Is renting my home to my own LLC really legal?
A: Yes. It is legal under the tax code. There is no prohibition on renting to your own company. The IRS cares that you follow the rules: keep it under 15 days, charge a fair price, and have a real business use. Thousands of business owners do this. It’s even discussed in tax strategy books and CPA journals as a smart move. Just make sure the arrangement isn’t abusive (see the pitfalls section above) and you’ll be fine.

Q: Do I need to pay self-employment tax or issue a 1099 for the rent my LLC paid me?
A: No. The rent income under the Augusta Rule is not reported as income at all on your personal return. Therefore, it’s not subject to income tax or self-employment tax. Since it’s not reported, most CPAs advise not to issue a Form 1099-MISC from the company to you for that rent, because that form would also get reported to the IRS. Instead, treat it like excludable income. On your LLC’s books, document the expense internally. (If a 1099 is mistakenly issued, you can still claim the exclusion on your return – but it’s simpler when no 1099 is generated for that payment.)

Q: What if my LLC has co-owners – can it still rent my personal house?
A: Yes. The LLC can rent a home from any owner (or even an unrelated person) and still deduct it. If you are the owner of the home, you get the tax-free income. If, say, you and a partner each own homes, the LLC could even rotate meetings between your two homes – each of you could get up to 14 days of rent from the LLC. Just ensure each person/home adheres to the limit individually. Co-owned homes or jointly owned vacation properties can also be rented to the business, but coordinate so the total days rented for each property doesn’t exceed 14.

Q: Do I have to charge my LLC the same amount every time or can it vary?
A: It can vary, as long as each rate is defensible as a fair market price for that particular use. For example, you might charge a bit more for a large company party that uses the whole house and backyard (perhaps equivalent to an event venue rate) and less for a small meeting in your living room. What’s important is that you have a basis for each amount (size of space used, number of attendees, local venue comparisons). Consistency helps avoid questions, but variation is fine if reasoned. Just avoid suddenly charging an exorbitant amount without justification.

Q: What kind of documentation is best in case of an audit?
A: Ideally, keep a folder (physical or digital) for each rental event. Include:

Rental agreement or invoice from you to the LLC specifying date, hours, purpose, and amount.
Proof of payment (copy of the check or bank transfer from the LLC to you).
Meeting agenda or event program for that day.
List of attendees (e.g., you, any employees, clients present).
Photos or minutes (optional but helpful to show the meeting occurred).
Market rate backup: a few printouts of comparable venue rentals or listings around that date.

Having these will make an audit go much smoother, as you can demonstrate it was a real, necessary business expense.

Q: If I don’t use all 14 days this year, can I carry them over or add them to next year?
A: No. The 14-day limit resets each tax year and cannot be carried forward. It’s “use it or lose it” per year. If you only used 5 days this year, you still only get 14 days next year (not 14+9). So plan each year’s events accordingly.

Q: Should I consult a professional before doing this?
A: Yes, if possible. While many business owners implement the Augusta Rule on their own, it’s wise to run it by a CPA or tax advisor, especially the first time. They can help you set the fair rental rate, document it correctly, and ensure it’s integrated properly in your tax filings. Professional advice is particularly important if your situation has complexities (e.g., multiple owners, very high dollar amounts, or if you’re also using a home office deduction).