IRS 14-day Rule (Augusta Rule)

Last updated on January 5th, 2026 at 05:03 pm

If you’ve searched “14-day rent home,” you’re probably looking for a tax strategy that can help you earn extra income without adding a new tax bill. Good news. This phrase usually points to the IRS 14-day rule, also known as the Augusta Rule.

This tax rule is simple on the surface. It allows you to rent your home for 14 days or fewer per year and keep the rental income completely tax-free for federal income tax purposes.

That means you can earn money from your home, legally, and often without reporting that income on your federal tax return.

However, there are important rules, limitations, and best practices you must follow, especially if you plan to rent your home to your own business.

This guide breaks it all down in plain English.

What The IRS 14-Day Rule Means

The IRS 14-day rule applies to homeowners who rent their residence for a short period during the year.

Here is the key benefit.

If you rent your personal home for 14 days or less in a calendar year, the income you earn from that rental is generally:

• excluded from federal taxable income
• not required to be reported on your tax return
• treated as tax-free income

This rule became famous because of Augusta, Georgia. Homeowners there often rented their homes during the Masters Tournament. The IRS rule made the income tax-free as long as the rental period was 14 days or fewer. That’s why the strategy is widely known as the Augusta Rule.

Why This Rule Can Be So Powerful

On paper, this is one of the few opportunities in the tax code to generate income that is not taxed.

That makes it attractive for several types of people.

For example:

• homeowners in high-demand areas during events
• short-term rental hosts who want a small rental window
• business owners who can justify renting their home for meetings
• professionals with frequent client visits or planning sessions

Even better, the process is straightforward. Yet, it must be handled correctly. Otherwise, you can lose the tax-free treatment.

How The Augusta Rule Works

To use the Augusta Rule, your home must qualify as a personal residence. You also must rent it for 14 days or fewer during the year.

Once you meet these conditions, the IRS generally allows you to treat the rental income as tax-free.

That leads to two important results.

First, you keep 100% of the rental income. Second, you do not include the income on your federal return.

However, there is a trade-off. You lose certain deductions.

So, it is important to understand both sides of the rule.

Tax-Free Rental Income Under The 14-Day Rule

The biggest advantage is simple.

All rental income you earn during those 14 days or fewer is generally not taxable on your federal income tax return.

That means:

• You do not report the income on Schedule E
• You do not pay income tax on the rental earnings
• You keep the full amount

This makes the Augusta Rule different from most rental scenarios.

In a normal rental situation, the IRS expects you to report income and then claim deductions. Under this rule, you skip the reporting. Therefore, the income stays tax-free.

The Important Catch: No Rental Expense Deductions

Here is where many homeowners get confused.

Because the rental income is not reported, the IRS also does not allow you to deduct rental expenses related to that income.

So, you typically cannot deduct expenses like:

• utilities
• repairs and maintenance
• homeowner’s insurance
• cleaning costs
• advertising expenses
• depreciation

This is not a loophole. It is part of the rule’s structure.

Still, you may be able to deduct standard homeowner expenses in the usual way.

For example, if you itemize deductions, you may still deduct:

• mortgage interest
• property taxes

Those deductions belong to homeownership. They are not tied to rental activity under the 14-day rule.

So, while you lose rental-specific write-offs, you do not lose every tax benefit of owning a home.

The Personal Use Requirement You Must Meet

The IRS does not allow every property to qualify. It must meet the definition of a personal residence.

In general, you must use the home personally for:

• more than 14 days during the year, or
• more than 10% of the total days it is rented, whichever is greater

This matters because the IRS wants to distinguish between personal residences and full-time rental properties.

So, if you barely use the home and rent it frequently, it may be treated as a rental property. In that case, the Augusta Rule likely does not apply.

However, for most homeowners, the personal use requirement is easy to meet, especially if the home is their primary residence.

Examples Of When The Augusta Rule Makes Sense

The 14-day rule is commonly used in a few predictable situations.

Here are the most popular examples.

Renting During A Major Local Event

If you live near a convention center, sports venue, festival, or annual tourist event, there may be times when rentals are in high demand.

In that case, you can rent your home for a short window, charge a premium rate, and keep the income tax-free.

This strategy is common in:

• tournament and event cities
• holiday destinations
• areas near large annual conferences

Renting for Your Business For Meetings

This is the version business owners often use.

A business owner may rent their personal home to their corporation or LLC for specific business purposes, such as:

• annual planning meetings
• strategy retreats
• executive sessions
• leadership training
• client events
• board meetings

When done correctly, the business can potentially deduct the rental expense as an ordinary and necessary business expense. Meanwhile, the owner may receive rental income tax-free under the 14-day rule.

This creates a rare tax advantage. But it also requires careful documentation.

Using The Augusta Rule As A Business Owner

If you want to rent your home to your own business, treat it like a legitimate rental transaction.

That means your rental arrangement should be reasonable, defensible, and properly recorded.

Here are the key best practices.

Use A Fair Market Rental Rate

Your business should pay a rate comparable to that of a similar space in your local market.

For example, compare against:

• local conference rooms
• coworking spaces
• short-term event venues
• hotels with meeting space

If you charge an unrealistic amount, it may raise red flags.

So, your safest approach is to document comparable rates and set your price accordingly.

Have A Business Purpose For Each Rental Day

Each rental day should have a clear business reason. That means a real meeting, event, or company activity.

Ideally, you should also keep:

• meeting agendas
• attendee lists
• meeting notes
• calendar invites
• proof of payment
• a written rental agreement

This documentation supports the business deduction. It also supports the legitimacy of the homeowner’s rental income.

Follow The 14-Day Limit Carefully.

This rule is strict. If you rent for 15 days or more, the tax treatment changes.

So, track rental days precisely.

In addition, avoid extra days by accident. Even a single additional day can trigger different reporting requirements.

Many business owners choose to stay well below 14 days to keep a safety cushion.

What Happens If You Rent For More Than 14 Days

If you rent your home for 15 days or more in a year, the IRS treats it differently.

At that point:

• All rental income must be reported
• You typically report income and expenses on Schedule E (Form 1040)
• You can deduct rental expenses, but usually prorated
• Depreciation may apply depending on the situation

In other words, the special tax-free treatment disappears.

Still, this is not necessarily bad.

If you rent for more than 14 days, you can claim deductions. That can reduce your taxable rental profit. Yet, it is a different strategy. It requires careful recordkeeping. It may also increase complexity.

So, it comes down to your goals.

If you want simplicity and a tax-free income, stay under 14 days.

If you want a larger rental operation, then you may accept the reporting and deductions model.

State And Local Taxes Still Matter

This is a step many people miss.

Even if the rental income is tax-free federally under the Augusta Rule, state and local rules may still apply.

Depending on where you live, you may need to address:

• state income tax treatment
• city or county occupancy taxes
• transient lodging taxes
• short-term rental registration requirements
• local zoning or permit rules

Some cities apply occupancy taxes even if you rent for only a few days. In other words, the federal 14-day rule does not always protect you from local lodging tax rules.

So, it is smart to check your local laws before renting your home, especially if you rent to the public.

Common Mistakes To Avoid

The Augusta Rule is simple. Yet, it is easy to mess up.

Here are the most common errors homeowners make.

Going Over 14 Days By Accident

This happens often. A homeowner may rent 14 days, then add an extra day for a late checkout. Or they may include a setup day. That can push the total to 15.

Once you hit 15 days, the tax treatment changes.

So, keep a clear log of rental days. Also, define rental periods carefully in writing.

Charging An Unreasonable Amount To Your Business

If your business pays far more than market rates, it could be questioned.

So, document comparable prices. Then stay within a reasonable range.

This is especially important if the rental is between you and your own business.

Poor Documentation For Business Rentals

If your business wants a deduction, you need documentation.

That means:

• proof of payment
• meeting records
• business purpose notes
• rental terms

Without records, the IRS may challenge the deduction. And if the deduction fails, the overall strategy may not hold up as expected.

A Practical Summary Of The Augusta Rule

Here is the Augusta Rule in one clear list.

If you rent your personal home for 14 days or fewer per year:

• Your rental income is generally tax-free federally
• You typically do not report the income on your return
• You cannot deduct rental expenses tied to that income
• You must meet personal use requirements
• Business use can be a powerful strategy when documented
• State and local taxes may still apply

This makes it a smart planning tool for homeowners and business owners. Yet, the details matter.

Final Thoughts

The IRS 14-day rule is one of the most valuable legal tax strategies available to homeowners. It can help you generate tax-free income with minimal hassle, as long as you stay within the rules.

Even so, it is not something you should improvise.

If you plan to use the Augusta Rule, especially as a business owner, talk to a qualified tax professional. A CPA or tax advisor can help you:

• Confirm your home qualifies
• structure the rental properly
• set a defensible fair market rate
• ensure documentation is complete
• review state and local tax requirements

When done correctly, the Augusta Rule can be a clean, simple, and highly effective tax move.