Augusta Rule Section 280A(g): Home Rental Documentation Checklist

Tucked inside Section 280A is the so-called "Augusta Rule," a short-term rental provision that can matter for business owners who use a residence for real meetings or events. The strategy is not a blanket deduction play; it depends on the statutory day-count limit, fair rental value, contemporaneous records and whether the business expense itself is ordinary, necessary and well documented.

The Statute

Section 280A(g) provides that if a dwelling unit is used as a residence and is actually rented for fewer than 15 days during the taxable year, the rental income is not included in gross income and rental-use deductions are not allowed. The statute draws a clean line: the rental must stay below 15 days.

The Business Owner Application

Most homeowners use the Augusta Rule for short-term rentals during local events. But for closely-held business owners, the more powerful application is renting to your own business. Common scenarios:

• Annual board meeting hosted at the owner's home rather than a hotel conference room.

• Quarterly strategic planning retreats for executive team or partners.

• Client appreciation events, training sessions, or all-hands gatherings.

• Photography or video shoots for marketing using the home as a backdrop.

The business side still has to support the rental as an ordinary and necessary business expense, and the homeowner side has to satisfy Section 280A(g). When both sides are documented, the rental can be excluded from the homeowner's gross income while the business evaluates its deduction under the usual expense rules.

The Reasonable Rate Standard

The rental rate should be comparable to what an unrelated third party would charge for similar space and amenities. Documentation should include:

• Quotes from at least three comparable local venues (hotels, conference centers, event spaces).

• A written rental agreement between the business and the homeowner.

• An invoice from the homeowner to the business.

• A formal record of the meeting — agenda, attendees, minutes, photos.

• Payment by check or ACH from the business to the homeowner.

The Day Counting Trap

The 14-day limit is a cliff, not a phase-out. Rent for 14 days or fewer and Section 280A(g) may apply. Rent for 15 days or more and the rental income is reported under the regular rental rules, including potential passive activity limitations under Section 469.

Days are counted on a calendar-day basis. A meeting that runs from 3pm Tuesday to 11am Wednesday counts as two days regardless of total hours. Plan rental events with this in mind.

Personal Use Requirement

For Section 280A(g) to apply, the dwelling must be used as the taxpayer's residence during the year — meaning personal use exceeds the greater of 14 days or 10% of total rental days. For a primary residence with 14 or fewer rental days, this is automatically satisfied. For vacation homes, watch the personal use threshold carefully.

Quantifying the Benefit

Consider a business owner whose home is occasionally suitable for board meetings or planning retreats. The planning file should show the business purpose, attendees, agenda, comparable rental evidence, invoice, payment record and running day count. The tax result should be modeled against the entity's facts before the meeting calendar is finalized.

Compounded over a decade and across multiple owners in a partnership or S-corp, the savings become substantial.

What the IRS Looks For

Section 280A(g) positions become more vulnerable when:

• The rental rate was wildly above market.

• No documentation existed for the actual business purpose of the meeting.

• The rental was a sham — no meeting actually occurred.

• The rental "agreement" was created retroactively after the IRS inquired.

The defense is contemporaneous documentation and a defensible rate. A modest home, thin records or retroactive paperwork can make the position hard to support.

Closing Thought

The Augusta Rule can be useful when the facts are real, the rental rate is supportable and the records are created as the meetings occur. It should be treated as a documentation-heavy planning item, not a year-end shortcut.