Most South Florida business owners have never heard of a tax strategy that lets them collect rental income from their own company and pay zero federal income tax on it. The Augusta Rule, formally known as Section 280A(g) of the Internal Revenue Code, allows homeowners to rent their personal residence to their business for up to 14 days per year without reporting that rental income at all. For a Coral Gables entrepreneur hosting board meetings or strategic planning sessions at home, this can mean thousands of dollars moved from the business to the owner's pocket, completely tax free.
This provision was originally written for homeowners in Augusta, Georgia who rented out their houses during Masters Tournament week. But the same rule applies year round to any homeowner, anywhere in the country, including Miami-Dade County. If you own a business and a home, you may be sitting on a legitimate deduction you have never used.
What Is the Augusta Rule Under Section 280A?
The Augusta Rule is a narrow but powerful exception buried inside Section 280A, the part of the tax code that generally restricts deductions for business use of a home. Section 280A(g) says that if you rent your residence for fewer than 15 days during the tax year, you do not have to report any of that rental income on your personal tax return. There is no requirement that the rent be modest. There is no requirement that you track expenses against it. The income simply disappears from your taxable income.
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The flip side is just as valuable. If your business pays you fair market rent to use your home for a legitimate business purpose, such as a board meeting, strategic planning retreat, or client appreciation event, the business can generally deduct that rent as an ordinary and necessary business expense. You get tax free income. Your business gets a deduction. That combination is rare in the tax code and it is exactly why the Augusta Rule has become a favorite strategy among tax advisors who work with closely held businesses.
Why This Matters for South Florida Business Owners
Miami-area entrepreneurs often run S corporations, partnerships, or multi-member LLCs that hold quarterly meetings, annual planning sessions, or client events. Many of these gatherings already happen informally in a home office, a backyard, or a waterfront patio. The Augusta Rule simply asks you to formalize what you are already doing and get paid for it, tax free.
How the 14 Day Home Rental Deduction Actually Works
To use this strategy correctly, you need four things: a legitimate business purpose, a documented market rent rate, a rental agreement, and proof of payment. Skipping any one of these steps is the most common reason this strategy falls apart under IRS scrutiny.
Step 1: Establish a legitimate business reason. The gathering has to be a real business activity, not a disguised personal event. Board meetings, annual shareholder meetings, strategic planning sessions, and employee training days all qualify.
Step 2: Determine fair market rent. You cannot pick a number out of thin air. You need to document what comparable event spaces, conference rooms, or venues in your area charge for a similar gathering. In South Florida, where event space and luxury home rentals command premium pricing, this often supports a daily rate of $1,500 to $3,000 or more depending on the size and amenities of the property.
Step 3: Create a written rental agreement. The agreement should be between you personally (the homeowner) and your business, specifying the date, the purpose, the rental rate, and the terms. This is a related party transaction, so documentation matters even more than usual.
Step 4: Have the business pay you directly and keep records. Invoice the business, have it cut a check or make a transfer, and keep calendar invites, agendas, sign in sheets, and photos as evidence the meeting actually happened.
Common Mistakes That Trigger IRS Scrutiny
The most frequent errors we see at WAYG when reviewing a client's Augusta Rule setup are inflated rent rates with no comparable data, missing written agreements, using the strategy more than 14 days in a calendar year, and failing to show a real business purpose for the gathering. Any one of these can turn a legitimate deduction into an audit problem.
Real Dollar Examples: What the Augusta Rule Saves You
Numbers make this strategy concrete. Here are three realistic scenarios based on client situations we regularly see in our Coral Gables office.
Example 1: Solo S corporation owner. A Miami-based marketing consultant operating as an S corporation holds four quarterly strategy meetings at her home, each billed at $1,200 per day based on comparable local meeting space rates. That is $4,800 in rental income paid from her S corporation to her personally. The S corporation deducts the $4,800 as a business expense, reducing its taxable income. She reports zero rental income on her personal return because the total days rented (4) fall under the 15 day threshold. Net result: $4,800 moves from the business to her personal account with no federal income tax owed on it.
Example 2: Multi-member LLC with annual retreat. A partnership of three attorneys in South Florida holds a two day annual planning retreat at one partner's waterfront home, documented at $2,500 per day based on comparable waterfront event venue pricing in Miami-Dade County. That is $5,000 in deductible rent for the partnership and $5,000 in tax free income for the homeowner partner. At a combined federal and state marginal rate of roughly 32% for that partner, this strategy saves approximately $1,600 in taxes that would otherwise apply if that money were paid as a guaranteed payment or distribution.
Example 3: Maximizing the full 14 days. A business owner who uses her home for the maximum 14 days per year, billing $1,800 per day based on documented local comparable rates, generates $25,200 in total rental income. Her business deducts the full $25,200. She reports none of it as taxable income. If that same $25,200 had instead been paid as salary or bonus subject to a 35% combined marginal rate, she would have owed roughly $8,820 in tax. Using the Augusta Rule correctly, she keeps the entire amount.
| Scenario | Days Rented | Daily Rate | Total Rent | Tax if Paid as Salary (approx) | Tax Owed Under Augusta Rule |
|---|---|---|---|---|---|
| Solo consultant, quarterly meetings | 4 | $1,200 | $4,800 | $1,536 (32%) | $0 |
| Partnership annual retreat | 2 | $2,500 | $5,000 | $1,600 (32%) | $0 |
| Maximum use case | 14 | $1,800 | $25,200 | $8,820 (35%) | $0 |
Comparing the Augusta Rule to Other Home Office Strategies
Business owners often confuse the Augusta Rule with the standard home office deduction, but they serve very different purposes and cannot both apply to the same expense.
| Feature | Augusta Rule (Section 280A(g)) | Standard Home Office Deduction |
|---|---|---|
| Who benefits | Homeowner personally, tax free income | Business owner, ordinary deduction |
| Day limit | Fewer than 15 days per year | Ongoing, year round use |
| Documentation needed | Rental agreement, market rate comps, proof of business purpose | Square footage, exclusive use records |
| Tax treatment of income | Not reported on personal return | N/A, it is a deduction not income |
| Best suited for | Board meetings, retreats, planning sessions | Daily operations run from a dedicated room |
| Risk of audit scrutiny | Moderate if undocumented | Low to moderate with mixed use issues |
Both strategies can coexist in the same business, but they apply to different facts. A dedicated home office used daily is a different animal than a one time board meeting rented out under Section 280A(g).
Setting Fair Market Rent the Right Way
The single biggest audit risk with the Augusta Rule is an unsupported rental rate. South Florida business owners should pull at least three comparable rates from local event spaces, hotel meeting rooms, or luxury home rental listings in Miami-Dade County before setting a price. Keep screenshots, printouts, or saved listings as part of your permanent tax file. If your home has a view, a pool, a dock, or other amenities that comparable meeting venues in Coral Gables or Miami charge a premium for, your rate should reflect that, but it needs to be defensible with real market data, not guesswork.
How This Fits Into a Broader Business Tax Strategy
The Augusta Rule works best as one piece of a larger plan. South Florida business owners who combine this strategy with proper entity structuring, retirement plan contributions, and accountable plan reimbursements often see the biggest combined tax savings. Our team builds these strategies through ongoing business tax strategy planning rather than a one time filing exercise, because the real value comes from doing it correctly every single year.
If your books are not accurately tracking these related party transactions, the deduction can get lost or misreported. This is one of many reasons we pair tax strategy with small business bookkeeping and managed accounting services, so the rent payment, the invoice, and the deduction all show up correctly on both sides of the transaction.
Who Should Use the Augusta Rule in 2026
This strategy is most effective for S corporations, partnerships, and multi-member LLCs that already hold periodic in person meetings and have enough profitability for the deduction to matter. A business that nets $40,000 a year probably will not see much benefit. A business netting $150,000 to $500,000 or more, common among Miami-area professional service firms, consultants, and medical practices, often finds this strategy worth $5,000 to $20,000 or more in annual tax free income depending on how many qualifying events it holds and how it documents fair market rent.
Sole proprietors filing on Schedule C generally cannot use this strategy the same way, since there is no separate legal entity paying rent to the individual. This is one more reason entity structure matters so much in overall tax planning.
Working With a South Florida Tax Advisor on Section 280A
The Augusta Rule is simple in concept but easy to execute poorly. Our Coral Gables headquarters team works with business owners across Miami-Dade County to set up compliant rental agreements, document fair market comparables, and build the paper trail that holds up if the IRS ever asks questions. We also coordinate this with your entity's overall tax position so the deduction lands where it does the most good.
If you are ready to find out whether this strategy fits your business, our team can walk through your specific numbers during a free consultation. You can also request a quote if you want a clear picture of what ongoing tax strategy support costs before you commit.
Frequently Asked Questions About the Augusta Rule
Q: How many days can I rent my home to my business under the Augusta Rule? A: You can rent your home for up to 14 days total during the calendar year and still exclude the rental income from your personal taxes. On day 15, the entire exclusion is lost for that year, not just the rent for the extra days, so tracking your days carefully matters.
Q: Do I need a written lease or rental agreement to use Section 280A(g)? A: Yes. While the tax code does not explicitly require a written agreement, the IRS expects documentation showing a legitimate arm's length transaction between you and your business. A simple one page agreement specifying the date, purpose, and rent amount protects you if the deduction is ever questioned.
Q: Can I use the Augusta Rule if I live in Miami or elsewhere in South Florida? A: Absolutely. The Augusta Rule applies nationwide and is not limited to Augusta, Georgia. South Florida business owners in Coral Gables, Miami, and throughout Miami-Dade County can use it the same way homeowners anywhere else in the country can, as long as they meet the business purpose and documentation requirements.
Q: What is the biggest mistake business owners make with this strategy? A: The most common mistake is setting a rental rate with no supporting market data, essentially picking a high number to maximize the tax free income without being able to justify it. If the IRS challenges the rate and you have no comparable rental data, the excess amount can be reclassified as a dividend or disallowed as a business expense entirely.
Q: Can my business deduct the rent it pays me under the Augusta Rule? A: Yes, as long as the rental serves a legitimate business purpose and the rate reflects fair market value, your business can deduct the rent paid to you as an ordinary and necessary business expense. This is what creates the dual benefit: a deduction for the business and tax free income for you personally.
Q: Does the Augusta Rule work for every type of business entity? A: It works best for S corporations, partnerships, and multi-member LLCs that are legally separate from the homeowner. Sole proprietors generally cannot use this strategy effectively because there is no separate entity to pay rent to the individual, which is one reason entity structure decisions matter so much for South Florida business owners planning around Section 280A.
The Augusta Rule will not replace a comprehensive tax strategy, but for the right South Florida business owner, it is a legitimate, well established way to pull money out of your business completely tax free. Done correctly, with real documentation and fair market rent, it holds up to scrutiny and puts real dollars back in your pocket every year. If you want help building this into your 2026 tax plan, our Coral Gables based team is ready to walk through the numbers with you.