The Augusta Rule, named after the city where the Masters Golf Tournament takes place, is a tax strategy outlined under Section 280a of the Internal Revenue Service (IRS) tax code. This rule allows business owners to rent out their primary residence or vacation home to their business for up to 14 days each year.
First, applying Augusta Rule allows you to reduce your business taxes by writing off the rental expense for up to 14 days. Second, the rental income you receive from your business is not subject to federal income tax.
Compile documentation to prove the rental rate you use is fair value. Research local venue rates for similar meetings to ensure your rental pricing is reasonable and legitimate. Provide a rental agreement between you and the business.
Issue invoice to the business for each day the business has rent your home and document what the rented space was used for. These meetings need to be conducted for legitimate business purposes. Document the meetings by taking corporate minutes
Create an invoice from you to your business. This invoice should specify all the charges and reflect the numbers indicated by your search for comparable. These invoices will come from you, the property owner renting out your qualified residence, to be paid by your business. Record the rental expense in your business’s book and have the business issues payment for this expense to you.