The Augusta Rule: How to Rent Your Home Tax-Free

Did you know there’s a little-known IRS rule that allows you to rent your home for short periods—up to 14 days a year—without paying a dime in taxes on the income? That’s right! This tax strategy, known as the Augusta Rule, is surprisingly flexible and can benefit anyone who owns a home, not just business owners.

Whether you want to rent your house for events, short-term stays, or even to your own business, the Augusta Rule offers a unique opportunity to earn tax-free income. And with tools like Landlord Studio, managing these short-term rentals has never been easier. Let’s break it down, step by step.

What is the Augusta Rule for Taxes?

The Augusta Rule IRS is part of Section 280A of the tax code. Essentially, it lets homeowners rent out their primary residence or vacation home for up to 14 days per year without having to report the income on their tax return.

The rule gets its nickname from Augusta, Georgia, where homeowners would rent out their homes during the Masters golf tournament to visitors. But it doesn’t matter if you’re not in Augusta; you can apply this rule anywhere in the U.S.

Here’s the key takeaway: you can earn money by renting your home for a short period each year, and that rental income is completely tax-free, as long as you follow the rules.

Who Can Use the Augusta Rule?

The great thing about the Augusta Rule is that it’s not limited to business owners. In fact, anyone who owns a home can take advantage of it. This includes:

• Primary residences: Your main home where you live most of the year.
• Vacation homes: Second homes, cabins, or beach houses.

Even if you don’t own a business, you can rent your home to someone else, be they friends, family, neighbors, or companies that need a space for an event, and the income made is then tax-free.

If you do happen to be a business owner, there’s an additional angle: it is possible to rent your own home to your business for meetings, retreats, or company events. The business can deduct the expense while you enjoy tax-free income. However, remember that this is optional—the Augusta Rule applies to anyone renting their property on a short-term basis.

How to Use the Augusta Rule

Here’s a friendly, step-by-step guide for taking full advantage of the Augusta Rule:

1. Determine How Many Days You Can Rent

You can rent your home for up to 14 days per year. That’s two weeks—any more than that, and the tax-free benefit disappears. Plan carefully and decide which days you want to rent your property.

2. Set a Fair Rental Rate

The IRS requires that the rental rate set reflect fair market value. Research local venues, short-term rentals, or event spaces to get an idea of reasonable rates. This ensures your rental is legitimate and avoids issues during tax season.

3. Draft a Simple Rental Agreement

Even if it’s just for two weeks, create a written rental agreement that can be signed by both parties outlining:

• The rental dates
• The rental rate
• The purpose of the rental

This doesn’t have to be complicated, but it should show that the arrangement is real and above board.

4. Keep Records

You'll need to keep detailed records of your property usage including the days it was rented out, who it was rented to, what the prupsoe of this rental was, and the rental rate set.

This is where a software like Landlord Studio can really help. You can:

• Store rental agreements digitally
• Track your tax-free income 
• Track dates the property is rented out
• Upload receipts and invoices

Having all your documents in one place makes it easy to stay organized and provides clear proof if the IRS ever asks for documentation.

Landlord Studio is a property management software designed for landlords. And, it offers a completely free tier perfect for this use case. Create your free account today to see how it can help you manage your short-term rental and keep your income tax-free.

5. Stick to the 14-Day Limit

Remember: Should you rent your property out for more than the 14-day Augusta Rule limit, the IRS will classify your property as a rental and will change the tax treatment of this income. 

You can use Landlord Studio’s calendar and reminders to track your rental days and stay under the limit.

Practical Examples of the Augusta Rule

Here’s how people commonly use the Augusta Rule:

• Renting to Friends or Family: Hosting a wedding, reunion, or private event at your home can generate tax-free income.
• Short-Term Vacation Rentals: Rent your home for a couple of weekends through Airbnb or VRBO. 
• Business Use (Optional): If you own a business, you can rent your property to your own company. 

Augusta Rule Limit

The Augusta Rule limit is strict: 14 days per year. Exceed this, and the IRS will treat your rental income like normal taxable income. It also only applies to personal-use properties, not properties rented year-round or used exclusively as investments.

With Landlord Studio, you can clearly track rental days and ensure you don’t accidentally exceed the 14-day limit, keeping your tax-free income safe.

Benefits of Using the Augusta Rule

Why should you consider using the Augusta Rule? Here are the main advantages:

1. Tax-Free Income

Any money you earn from renting your home under the 14-day limit is completely tax-free. With Landlord Studio, you can monitor exactly how much you earn and spend, giving you a clear picture of your financial gains.

2. Flexibility

The rule applies to primary and vacation homes, and the rental period is short and flexible. You’re free to choose the best days for your schedule.

3. Optional Business Benefits

If you own a business, renting your home can increase your deductible expenses while you enjoy tax-free income.

4. Simple to Implement

Compared to other real estate tax strategies, the Augusta Rule is straightforward. A rental agreement and proper documentation are all you need, and Landlord Studio makes the entire process even easier.

Tips for Getting the Most Out of the Augusta Rule

• Plan Ahead: Decide early which 14 days you’ll rent your property.
• Set Fair Market Rates: Avoid IRS scrutiny by keeping rental rates reasonable and well-documented.
• Keep Everything Written: Agreements, receipts, and event logs are essential. Landlord Studio keeps all these records in one convenient digital space.
• Separate Personal and Rental Use: Only days rented under the rule count—personal use on rental days doesn’t matter, but careful planning helps avoid mistakes.

Conclusion: Make Your Home Work for You

The Augusta Rule is one of the simplest and most effective ways to earn tax-free income from your property. Whether you’re renting to friends, family, short-term tenants, or even your own business, this rule provides a flexible opportunity to generate extra income while staying within IRS guidelines.

Using Landlord Studio alongside the Augusta Rule makes it even easier. You can manage agreements, track rental days, record payments, and store all necessary documents in one place. With the right planning, you can unlock a tax-free income stream and turn your home into a profitable asset—without the stress of paperwork or missed deadlines.

Augusta Rule FAQs

What is the Augusta Rule for taxes?

The Augusta Rule is a provision in Section 280A of the IRS tax code that allows homeowners to rent their primary or vacation home for up to 14 days per year tax-free. Rental income earned during this period does not need to be reported on your tax return.

Who can use the Augusta Rule?

Anyone who owns a home in the U.S. can use the Augusta Rule. This includes:

• Owners of primary residences
• Owners of vacation homes
• Business owners who rent their home to their own company (optional)

How many days can I rent my home under the Augusta Rule?

The Augusta Rule limit is 14 days per year. Exceeding this limit will make all rental income taxable.

Do I have to be a business owner to use the Augusta Rule?

No. While business owners can rent their home to their own company as a tax strategy, the Augusta Rule applies to any homeowner renting their property for short-term events or stays.

How do I use the Augusta Rule?

To use the Augusta Rule:

1. Rent your home for up to 14 days in a calendar year.
2. Set a fair rental rate based on local market value.
3. Create a written rental agreement.
4. Keep documentation such as contracts, invoices, and payment records.
5. Ensure you don’t exceed the 14-day limit.

Is rental income under the Augusta Rule taxable?

No. Rental income earned under the Augusta Rule is completely tax-free, provided you follow all rules and stay within the 14-day annual limit.

Can I rent my home for vacation stays or events?

Yes. The Augusta Rule applies to any short-term rental, including:

• Vacation rentals
• Weddings or family events
• Corporate or business events (optional)

Can I track and manage Augusta Rule rentals with software?

Yes. Platforms like Landlord Studio can help homeowners:

• Store rental agreements digitally
• Track rental dates and payments
• Maintain records for tax purposes

Do I need a rental agreement to use the Augusta Rule?

Yes. A written agreement outlining the rental dates, rental rate, and purpose helps substantiate your tax-free rental income if the IRS requests documentation.

Can I combine the Augusta Rule with other tax strategies?

Yes. The Augusta Rule can be combined with other legal deductions and tax strategies. Business owners, in particular, can use it to increase deductible expenses while keeping rental income tax-free.