Posted on March 11th, 2024

The Augusta Rule is an income tax loophole that allows you to shift your business’s taxable business income to tax-free personal income.  

If you’re a golfer, then you know the Masters Tournament is held every year in Augusta, Georgia. Like the Super Bowl or the Olympics, the Masters draws a lot of visitors who are always looking for comfortable lodging close to the action.  

Back in the 1970s, wealthy homeowners near the course started renting their homes during the tournament, and they lobbied for that income to be tax-free since their homes weren’t full-time rental properties.  

The result? When you rent your personal home for up to 14 days per year, that income is not taxable. This is true even if you rent the home to a business you own.  

So next time you need to hold a corporate meeting or a team training, do it in your home rather than at your office and have your business make out a check to you for renting your home.  

You can claim the rental expense for your business, as long as you document the business use and confirm that it was a reasonable rate. You can find comparable rates by getting quotes for hotel event spaces or even Airbnb rentals in the area.  

And as long as you don’t rent your home for more than 14 days per year, you’ll be able to take the business expense without having to report the money as rental income on your personal tax return.  

A tax-deductible write-off for your business and tax-free personal income equals a win/win situation for you. We advise our clients to have one monthly company meeting at their home, which equals a total of 12 rental days.  

If you rent your home to your business for $1,000 for each meeting, that’s $12,000 in income that you just shifted from taxable income to tax-free income. If you’d like to see if this tax strategy will work for you, you can book a FREE consultation to learn more! You could easily save thousands of dollars in federal and state income taxes each and every year with this one simple strategy.