Rent out your home for 14 days tax-free
Rent out your home for up to 14 days a year without paying federal income tax on the rental income. Under a tax rule known as the Augusta Rule, you may be able to rent out your home for up to 14 days a year without reporting the rental income on your federal tax return. This can be especially useful if you own a business that needs a place to hold meetings or other business events.
Main tax law
The rule comes from Section 280A(g) of the Internal Revenue Code
How to use it
You need to live in the home you're renting out
The home must qualify as a residence that you personally use during the year. This could be your house, condo, or another property you use as your home. A property you own purely as a rental, but don't use as your residence, generally won't qualify under this rule.
Find a real reason to rent out your home
You need an actual rental, not just a way to move money around on paper. For example, you could rent your home to a company for a business planning meeting, a team retreat, or another legitimate business event. You don't have to own the company renting the home, but the rental must be genuine.
Charge a reasonable rental price
Look at what similar homes or venues charge for comparable events. Consider the size of the space, location, amenities, and length of the rental. Keep evidence of how you chose your price, such as quotes from nearby venues or comparable property listings. Charging an unusually high price just to create a bigger deduction could attract scrutiny.
Put the agreement in writing
Write down the rental dates, price, purpose, and terms. If a business is renting your home, make sure the business purpose is clear. If you own the business yourself, be especially careful to document why the business needs the space and why the rental price is reasonable.
Actually rent out the home
The rental must really happen. Keep the agreement, invoice, proof of payment, calendar entries, and records showing that the renter used the property. Don't create paperwork for a meeting or rental that never took place.
Keep the rental period under 15 days for the entire year
The rule applies when you rent out the home for fewer than 15 days during the tax year. That means you can rent it for 1, 7, or 14 days and potentially qualify. If you rent it for 15 days or more, this particular tax break no longer applies. Count the rental days across the whole year, not just the days rented to one customer.
Don't claim the same rental expenses as deductions
If your rental income qualifies for this tax break, you generally don't report that income on your federal return. However, you also can't deduct expenses attributable to the rental activity under this rule. The business renting the home may be able to deduct the rent as a business expense, but only if it meets the normal requirements for a legitimate business deduction.
Official tax rules & sources
Applies to
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