Major League Tax Strategies: The Power of the Augusta Rule

From Augusta National to Your Bottom Line – How the Augusta Rule Can Unlock Tax-Free Income for Business Owners

When it comes to tax strategies, most business owners and investors are playing in the minor leagues. They take the standard deductions, follow generic advice, and assume they’re doing everything right—while leaving thousands of dollars in tax savings on the table.

But the business owners who win the tax game? They think differently. They don’t just follow the basics; they take advantage of every available opportunity written into the tax code.

One of the cleanest, easiest, and most overlooked strategies is the Augusta Rule—a way for business owners to pull money from their business completely tax-free. And no, this isn’t some sketchy loophole. It’s straight out of the IRS playbook.

If you qualify, this is one of the simplest ways to extract profits without paying income tax on them. Let’s break it down.

What Is the Augusta Rule?

The Augusta Rule, officially known as IRC Section 280A(g), allows homeowners to rent out their home for up to 14 days per year and keep the rental income completely tax-free.

It got its name because of The Masters golf tournament in Augusta, Georgia. Every year, homeowners around the Augusta National Golf Club rent out their homes to golf fans and corporate sponsors for ridiculous amounts of money. The IRS decided that if a home is rented for 14 days or fewer per year, the income is not taxable—no income tax, no self-employment tax, no payroll tax.

That’s great for people in Augusta, but here’s where things get interesting: Business owners can legally use this rule to pay themselves tax-free rent from their own business.

How Business Owners Can Use the Augusta Rule

If you own an S-Corp, LLC, or any incorporated business, you can take advantage of this rule by renting your home to your own company for business meetings. Instead of paying for a hotel conference room, you pay yourself.

Here’s how it works:

Determine a fair rental rate – Look at what local venues or meeting spaces charge for similar events.
Host a legitimate business event – This could be a board meeting, strategy session, team training, or client dinner.
Have your business pay you for the rental – Your company writes you a check for fair market rent.
Exclude the income from your personal taxes – Since you’re renting for 14 days or fewer, this income is completely tax-free.
Your business gets a full deduction – Your company writes off the rental cost, lowering its taxable income.

The end result? Your business gets a tax deduction, and you personally receive tax-free income. It’s one of the cleanest tax strategies out there.

How Much Can You Save?

The amount you can pay yourself tax-free depends on the fair rental value of your home. Let’s run an example:

A nearby hotel conference room costs $1,500 per day.
You host four company meetings per year in your home.
Your company pays you $1,500 per day x 4 days = $6,000.
You owe $0 in taxes on this income.
Your business deducts $6,000, lowering its taxable income.

If you’re in the 35% tax bracket, that’s $2,100 in taxes saved just by using your home instead of an external venue.

And if you use all 14 available days, the savings can be even bigger.

Common Mistakes to Avoid

Like any great tax strategy, this only works if you follow the rules. Here’s where people go wrong:

Guessing their rental rate – You can’t just pull a number out of thin air. You need to base your rate on actual comps (local hotels, event spaces, Airbnbs).
Not documenting the business purpose – Keep records of meeting minutes, agendas, and proof that the event happened.
Going over the 14-day limit – The tax-free benefit disappears if you rent for more than 14 days in a year.
Skipping a formal rental agreement – Treat this like any other rental transaction to stay compliant with IRS guidelines.

Who Should Be Using the Augusta Rule?

If you’re a business owner and your home is a reasonable place to hold meetings, this strategy is for you.

S-Corp and LLC owners – Especially if you’re looking for additional ways to take money out of your business tax-free.
High-income earners – If you’re in a high tax bracket, this is a clean way to lower your taxable income.
Business owners who host meetings – If you’re already paying for meeting space elsewhere, why not pay yourself instead?

Even if you haven’t hosted business meetings in your home before, this is a strategy worth exploring.

Final Thoughts: Play Smarter, Not Harder

Most CPAs won’t bring this strategy to you. Not because they don’t know about it, but because they’re not thinking strategically.

The average CPA files your taxes, makes sure the numbers add up, and moves on.A great tax strategist looks for opportunities to legally lower your tax bill—without you having to ask.

The Augusta Rule is just one example of how high-level tax planning can put money back in your pocket. If your CPA isn’t bringing strategies like this to the table, you’re probably overpaying in taxes.

Ensure you're making the most of every tax strategy. Apply today for a Value Conversation, where together we’ll determine if tax planning is the right move for you.