Can I Use the Augusta Rule for My Short-Term Rental?

The Augusta Rule (IRC §280A(g)) allows homeowners to rent their personal residence for up to 14 days per year completely tax-free. Most STR hosts cannot use it for their dedicated rental properties — the rule only applies to your personal residence, and only when you rent it fewer than 15 days per year. Here is exactly who qualifies, who does not, and what the popular S-corp strategy involves.

What the Augusta Rule Actually Says

Under IRC §280A(g), if a taxpayer rents their personal residence for fewer than 15 days during the year, the rental income is excluded from gross income entirely and does not need to be reported on their tax return. The tradeoff: no deductions are allowed for the rental activity either.

The rule is named after Augusta, Georgia, where homeowners have historically rented their homes to Masters Tournament visitors at rates of $5,000–$20,000 per week — completely tax-free under this provision.

Who Qualifies: The Two Requirements

• Personal residence: The property must be your primary or secondary personal residence — a place where you actually live. A dedicated STR property that you don't personally inhabit does not qualify.
• Fewer than 15 rental days: You must rent the property for 14 days or fewer during the year. Rent it on day 15 and the exclusion disappears entirely — all income becomes taxable.

When STR Hosts CAN Use the Augusta Rule

There is one scenario where an STR host can legitimately use the Augusta Rule: if your Airbnb listing IS your personal home and you rent it for 14 days or fewer per year. Some hosts who live in high-demand markets (near major events, festivals, or tourist destinations) rent their home occasionally while they travel. If the total rental days stay under 15, that income is tax-free.

Note: the moment you hit 15 rental days, you cross into the normal rental income reporting requirements, and all income (not just the income above 14 days) becomes taxable.

The S-Corp Strategy: Renting Your Home to Your Business

This is where the Augusta Rule gets creative — and controversial. Here is the strategy some tax professionals promote:

• You own an S-corp that operates your STR business
• Your S-corp holds legitimate business meetings at your personal home (board meetings, strategy sessions, client meetings)
• You rent your home to the S-corp at fair market value for those meeting days (up to 14 days/year)
• You exclude the rental income under §280A(g) — no personal income tax on those payments
• The S-corp deducts the meeting rent as a business expense

The net effect: money moves from the S-corp (where it would have been taxable) to you personally (where it's excluded under §280A(g)), creating a tax benefit on both ends.

Why the IRS Scrutinizes This Strategy

The IRS has increasingly challenged aggressive Augusta Rule implementations for several reasons:

• The meetings must be genuine and documented — not paper meetings that never occurred
• The rental rate must reflect actual fair market value — what you could rent the space to an unrelated party for the same purpose
• The S-corp deduction must be for legitimate business meeting expenses, not personal use
• Some courts have challenged the deductibility of the S-corp's rent payment when the payments are effectively circular (owner to themselves)

The Bottom Line for STR Hosts

For most dedicated STR hosts:

• If your rental property is not your personal residence → Augusta Rule does not apply to that property
• If you occasionally rent your primary home (under 15 days/year) → Augusta Rule applies, income is tax-free
• If you want to implement the S-corp meeting strategy → get qualified CPA guidance first, ensure the meetings are genuine, and document everything

Disclaimer

This article is for informational purposes and does not constitute tax, legal, or financial advice. Tax rules vary based on your specific situation, filing status, entity structure, and jurisdiction. Always consult a qualified CPA or tax professional for guidance on your specific tax situation. IRS rules and thresholds are subject to change — verify current requirements at irs.gov before filing.