How You Can Rent Your Home to Your Own Business
Quick read about the benefits of the Augusta Rule to business owners
1/31/20252 min read
How You Can Rent Your Home to Your Own Business
One of the most powerful ways to take advantage of the Augusta Rule (IRC Section 280A(g)) is by renting your personal residence to your own business for legitimate business purposes. This strategy allows you to move money from your business to yourself tax-free while also giving your business a fully deductible expense—as long as it’s properly documented.
How It Works
Your Business Rents Your Home for Business Purposes
You must have a valid business purpose for the rental, such as:
Hosting company meetings or strategic planning sessions.
Conducting employee training or workshops.
Entertaining clients or holding networking events.
The IRS does not allow this for routine work-from-home activities—you must actually be "renting" the space for a distinct event or meeting.
You Set a Fair Market Rental Rate
The amount your business pays you must be reasonable and in line with market rates for similar rental spaces.
You can determine fair rental value by checking rates for conference rooms, coworking spaces, hotels, or Peerspace listings in your area.
Your Business Pays You, But You Don’t Pay Taxes on the Income
Your business writes a check or transfers funds to you personally for the rental.
Because the rental period is 14 days or fewer per year, the income is completely tax-free for you.
Your business deducts the expense as a business cost, lowering its taxable income.
Example Scenario
Let’s say you own a small business and decide to rent your home for one full-day strategy meeting per quarter (4 days total per year).
You research fair market rates and determine that renting a comparable conference space costs $1,000 per day.
Your business pays you $4,000 over the year for renting your home.
You do not have to report this $4,000 as income on your personal tax return (because it falls under the Augusta Rule).
Your business deducts the $4,000 as a rental expense, reducing its taxable income.
This effectively allows you to move $4,000 from your business to yourself tax-free while lowering your business’s tax liability.
Key IRS Compliance Requirements
To ensure you remain compliant and audit-proof:
✔ Create a Formal Rental Agreement: Draft an agreement between yourself and your business outlining the rental terms (date, rate, purpose).
✔ Document the Business Purpose: Keep meeting notes, attendee lists, and photos of the event if possible.
✔ Pay Yourself Properly: The business should issue a check or bank transfer to your personal account—do not pay in cash.
✔ Stay Within the 14-Day Limit: Exceeding 14 days will require you to report the income on your personal taxes.
By following these guidelines, you can legally shift money from your business to yourself tax-free while ensuring your business remains fully compliant with IRS regulations.
