💡 The Augusta Rule: How the wealthy turn their homes into tax-free money machines

☕ Good morning!

It’s Masters week, so let’s talk about the Augusta Rule, a tax provision named after the home of the tournament.

The Augusta Rule isn’t a loophole for golf dads in Georgia. It’s a small, sharp, and devastatingly efficient surgical instrument in the hands of those who know how to cut clean.

Buried in IRC §280A(g), it allows you to rent your home to anyone, including your business, for up to 14 days per year. 

The August Masters Tournament (Source)

The rental income is 100% tax-free. This isn’t fringe theory; it’s black-letter law. 

And when executed properly, it becomes one of the most elegant and legal ways to siphon untaxed dollars out of your own company and into your personal pocket.

(Source: https://www.law.cornell.edu/uscode/text/26/280A) 

Here’s the catch: most accountants barely understand it. That’s fine; you’re not “most accountants,” and neither is the right financial planner. 

This is the playbook power players use. Think family offices, private equity founders, and entrepreneurs with multi-entity webs and ultra-complex trusts. The ones who play chess while everyone else is doing TurboTax.

Let’s talk shop.

Step One: Rent to Yourself (Legally). Corporate Structure Is Everything

The IRS doesn’t care that you’re both landlord and business owner; they care whether your transaction passes two tests:

1. Real business purpose

2. Fair market value

You can apply this rule to multiple properties as long as each property qualifies as a personal residence (i.e., you use it personally for a significant portion of the year — this can include your primary home, a vacation property, etc.).

Here’s how to use your home as a rental within the parameters of the Augusta Rule. 

🧳 Real business purpose. Rent your property to your business only for legitimate uses, like strategy offsites, advisory meetings, and team planning sessions. No birthday dinners or poker nights.

💰 Fair market value. Pull comps for meeting spaces in your area. Document the going daily rate. If your home has amenities like a pool, waterfront, or large square footage, use that to justify a premium.

📅 Keep it under 15 days. Each property must be rented for 14 days or fewer per year. Once you hit day 15, the tax-free magic disappears, and all income becomes reportable.

📝 Document everything. Create an invoice. Draft a lease agreement. Add calendar invites, agendas, photos of the event setup. Don’t assume your word will cut it in an audit. See the next section to learn how to win the audit before it starts.

🎥 Live from the Links: A Real-World Breakdown of the Augusta Rule

I recorded this quick video while walking the course - In under a minute I break down how the Augusta Rule works—and why it’s one of the cleanest ways to pull tax-free income from your home:

Step Two: Win the Audit Before It Starts

🫖 Want to invite the IRS over for tea? Send five figures from your business to yourself and pretend no one needs to see receipts.

This isn’t amateur hour. You need receipts. Calendars. Agendas. Comps. 

Eyebrow-raising detail that communicates: “I know exactly what I'm doing. And I'm not afraid of you.” Here’s your bulletproof vest:

💼 Make It Look Like Business. Not a charcuterie-fueled weekend. The calendar should read “Executive Risk Review” or “Shareholder Succession Summit.” Drop words like fiduciary, compliance, and forecast. Kill words like social, retreat, and celebration. Just be accurate; throwing a party branded as a meeting may come back to bite you. 

📸 Show the Scene. Pictures. Nametags. Projectors. Flip charts. Work sessions. Attendees mid-action—not mid-champagne. If it looks like business, it is.

📈 Lock In the Rate. Back it up with data—Airbnb comps, property manager letters, or reports from tools like AirDNA. Show “here’s what this property rents for in this zip code, this time of year.” Screenshot everything. Print PDFs.

AirBnb’s native pricing estimate tool. (Source) 

📝Paper It Up. Formal lease agreements with indemnification language and specific-use clauses. Don’t just submit a basic free template from Google, modify it with a high degree of detail for your purpose. 

🫱🏻‍🫲🏼 Board Blessings. Get a formal board resolution stating why you’re hosting the event, what it costs, who approved it, and where the pricing came from. Timestamp it before the rent hits your bank.

❄️ Step Three: December = The Harvest Window

The Augusta Rule is a timing tool disguised as a tax strategy. Each rental event must be under 14 total days, but the value of each day spikes when paired with strategic timing.

Smart founders use December like a deduction vending machine. For example:

1. Dec 10: Host your client advisory board

2. Dec 18: Year-end partner planning session

3. Dec 28: Internal strategic finance debrief

That’s three different meetings, each with its own purpose. Each is fully deductible by the business, and each rental check lands in your personal account tax-free.

🧠 Making Sense of the Augusta Rule

This rule is simple on paper but complex in execution. For those willing to show their work, it delivers a clean, recurring slice of tax-free top-shelf income year after year.

This isn’t small business expense accounting. It’s strategic income engineering. 

Dodging the IRS with tight documentation and clean processes is one thing, but don’t forget that lawsuits happen. 

Renting out your house could be a liability minefield unless you reinforce the perimeter.

For example, if you’re hosting third parties in a personal space. Amp up your coverage. $2M is the new floor.

Make sure you lease in the entity’s name. You want to separate yourself (the person) from your business guest list.

Define use and indemnify. The contract should define clearly what the house is being used for and what it’s not. Add an indemnity clause and limit occupancy.

Think of it like a co-working space at your private residence. Get your attendees to acknowledge the business purpose, and that they're not staying at a licensed commercial venue.

But that’s lawyer stuff– if your financials and documentation are on point, you can use the Augusta Rule to cover some serious ground between you and your financial goals. 

Stay savvy, stay proactive, and keep your financial future bright.

Until next week!

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

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