El Paso Investors Club ©

By Tiffany & Melanie on June 24, 2026
Tiffany McBroom and Melanie Sikma ask; Did you know there is a section of the tax code that can let some homeowners earn short-term rental income from their home without paying federal income tax on it, if they follow specific rules? It is often called the “Augusta Rule”. Click here to read more.

Did you know there is a section of the tax code that can let some homeowners earn short-term rental income from their home without paying federal income tax on it, if they follow specific rules?

It is often called the “Augusta Rule”. In simple terms, if your home is used as a residence and you rent it out for 14 days or fewer during the year, you can generally exclude that rental income from your taxable income.

People in Augusta, Georgia famously used this during the Masters golf tournament by renting out their homes for a short time at high rates, without having to report that limited rental income on their federal tax returns.

For business owners with a separate entity, there can be a planning opportunity: in the right circumstances, your business may be able to rent your home for legitimate business purposes (like meetings or planning sessions), deduct the rent as a business expense, and you may still qualify to exclude up to 14 days of that rental income on your personal return. This is sometimes used for things like board or strategy meetings held at the owner’s home.

A few important points to stay inside the rules:

• The property must be a home you use as a residence, not a purely investment or commercial rental property.
• The total number of rental days for the year must be 14 or fewer. If you go over 14 days, the rental income is generally taxable and normal rental rules apply.
• If you rent to your own business, there needs to be a real business purpose, fair market rent, and strong documentation (agenda, notes, dates, attendees, and a clear money trail).
• You cannot deduct expenses related specifically to those Augusta Rule rental days on your personal return, even though the income is excluded.

This strategy can be powerful when set up correctly, but it’s not one-size-fits-all. The details matter, especially for S corp and LLC owners or anyone renting to a related business, since those situations can face more IRS scrutiny.

If you’re a business owner or high-income earner and want to see if the Augusta Rule makes sense for you, just reply to this email and we can walk through it together as part of your overall tax plan.

Tiffany McBroom and Melanie Sikma are a sister powerpack combo! They grew up listening to Byron, who is their father, mentor and guide, talk tax and financial strategies with his business owning friends on camping trips. Byron has been a CPA for 30+ years and thrives on finding new solutions to saving business owners more on taxes. His excitement for helping entrepreneurs make their dreams come true led both of them into the same field as him.  Learn more by visiting onestoptaxstrategists.com.