What Do You Need in Place to Use the Augusta Rule Properly?

The Augusta Rule is one of the few strategies in the tax code that lets you legally move money from your business to yourself without being taxed.

It allows you to rent your home to your business for up to 14 days per year and keep that income tax-free.

But knowing about it and using it correctly are two very different things. The IRS doesn’t care that you’ve heard of it. They care how it’s executed. There are specific requirements that separate a clean deduction from one that gets disallowed.

We put together a guide with the 10 essentials you need in place so your deductions hold up if you’re ever audited.

Here are the first four:

Your Business Has to Qualify
The Augusta Rule only applies to S-Corps, C-Corps, Partnerships, and LLCs with an S or C election.
There Has to Be a Real Business Purpose
The event needs to tie directly to real business activity such as strategic planning or team training.
Your Rental Rate Has to Be Justified
You need real, documented comparables that support your rental value based on your local market.
You Need a Rental Agreement in Place
A written rental agreement needs to be created and signed on or before the event date.