The Augusta Rule — What Actually Works Under IRS Section 280A, Including Multiple Homes and Land, and the Common Ideas That Do Not

Pathfinding Consultants | Business Tax Preparation | Orange County, CA | June 2026

Source: IRC §280A(g),(a),(c)(1),(c)(6),(d),(f)(1) | IRC §162 | IRC §6001 | IRS Topic No. 415 | Rev. Proc. 2008-16 | IRS Chief Counsel guidance (PMTA / PLR 200120700) | Prop. Reg. §1.280A-1(c)

The Augusta Rule — IRC §280A(g) — is widely discussed online, and much of what circulates is incorrect. This blog separates what the IRS sources actually support from common ideas that do not hold up, and it addresses the questions Orange County business owners ask most: what happens with multiple homes, and whether land qualifies. It is an educational explanation and not a recommendation to use any particular approach. Whether the Augusta Rule applies to a specific situation depends on the facts and should be reviewed with a qualified tax advisor near me. Pathfinding Consultants provides business tax preparation Orange County small businesses use. When owners search for tax firms near me, knowing which version of the Augusta Rule the IRS sources support — and which they do not — matters. Source: IRC §280A(g); IRS Topic No. 415.

First: The Property Must Be a Dwelling Unit Used as a Residence

The Augusta Rule under Section 280A(g) excludes rental income from gross income only when a dwelling unit is used by the taxpayer as a residence and is rented for fewer than 15 days in the tax year. Two definitions control this. First, IRC §280A(f)(1) defines a dwelling unit as a house, apartment, condominium, mobile home, boat, or similar property that provides basic living accommodations — sleeping space, toilet, and cooking facilities. Second, IRC §280A(d) defines when that unit is used as a residence: personal use must exceed the greater of 14 days or 10% of the days the unit is rented at a fair rental. These two definitions decide whether the home rental tax rule applies at all. Source: IRC §280A(f)(1); IRC §280A(d).

Myth: “Rent out a rental property under the Augusta Rule.”

A property the owner does not personally use as a residence does not meet the Section 280A(g) condition. The home rental tax rule applies to a dwelling used as a residence — not to a pure rental property the owner does not occupy. A standard rental property is reported under the normal rental rules, not under the 14 day home rental exclusion. Source: IRC §280A(g),(d).

Land and Vacant Lots: The Augusta Rule Does Not Apply

A question Orange County property owners ask is whether raw land, a vacant lot, or undeveloped acreage can be rented to a business under the Augusta Rule. Under the IRS definition, it cannot. Source: IRC §280A(f)(1).

Land alone is not a dwelling unit

Section 280A applies to a dwelling unit, which IRC §280A(f)(1) defines as a structure providing basic living accommodations — sleeping space, a toilet, and cooking facilities. Raw land, a vacant lot, or undeveloped acreage has no such structure and is therefore not a dwelling unit. The Augusta Rule under Section 280A(g) does not apply to land by itself. Structures and property appurtenant to a dwelling unit (for example, a garage attached to a qualifying home) are treated as part of that dwelling unit, but land with no qualifying structure does not qualify on its own. Source: IRC §280A(f)(1); Prop. Reg. §1.280A-1(c).

Source: IRC §280A(f)(1); Prop. Reg. §1.280A-1(c). A dwelling unit includes a house, apartment, condominium, mobile home, or boat with sleeping, toilet, and cooking facilities. A separate payment for use of land would be evaluated under the general §162 rules, not the Section 280A(g) home rental tax rule.

Multiple Homes: Each Dwelling Unit Is Counted Separately

Another common question is what happens when a taxpayer owns more than one home — for example, a primary residence in Orange County and a vacation home elsewhere. Under Section 280A, the rules apply per dwelling unit. Source: IRC §280A.

The 14 day home rental count is tracked separately for each property

Section 280A applies its rules to a dwelling unit. Where a taxpayer owns more than one qualifying dwelling unit — such as a primary residence and a vacation home — each property is evaluated on its own. Each must independently be used by the taxpayer as a residence under IRC §280A(d), and each must independently be rented for fewer than 15 days for the Section 280A(g) income exclusion to apply to that property. The rental days do not combine across properties. Source: IRC §280A(g),(d),(f)(1).

⚠  “Each counted separately” does not change the other requirements. For each property, the dwelling unit must be used as a residence, the rental must be fewer than 15 days, the rate must be a fair rental, and — if a business pays the rent — the deduction must be ordinary and necessary and documented. A vacation home rented 15 days or more does not get the exclusion for that property. Source: IRC §280A(g); IRC §162.

The Rent Must Be a Fair Rate — Not Inflated

A common idea is to charge the business a high rate to move more money at the 14 day home rental exclusion. This does not work, because the business deduction side is governed by IRC §162.

Myth: “Charge the business an above-market rate.”

When a business deducts rent, the amount must be an ordinary and necessary business expense under IRC §162, which means it must be reasonable — a fair rental. Whether an amount is a fair rental is determined on all the facts and circumstances. An amount above the fair market rate for comparable space is not ordinary and necessary, and the excess is not deductible. Inflating the rate does not increase a valid deduction; it creates a disallowed one. Source: IRC §162; Rev. Proc. 2008-16.

The Employee Home-Office Trap vs a Genuine Business Meeting

This is the distinction most online discussions get wrong. IRC §280A(c)(6) bars one structure but does not bar another, and the difference determines whether a Section 280A arrangement holds up.

Barred: Employee renting a home office to the employer for services performed there

IRC §280A(c)(6) provides that the home-office and rental deduction exceptions do not apply to amounts attributable to renting a dwelling unit, or a portion of it, by the taxpayer to the taxpayer’s employer during any period the taxpayer uses that space performing services as an employee. Treating an employee’s ongoing home-office use as “rent” to the company is specifically disallowed. Source: IRC §280A(c)(6).

Can work: An S-Corp holding a genuine, documented business meeting

IRS Chief Counsel guidance has stated that §280A(c)(6) refers only to the employee, and that an S corporation’s own deduction under §162 for rent is not affected by §280A(c)(6). A genuine, documented business meeting — such as a board or staff meeting — held at the owner’s residence for fewer than 15 days in the year, at a fair rental rate, with records of the business purpose, is a different situation from the barred employee home-office arrangement. The income can be excluded to the owner under §280A(g), and the company’s rent is evaluated as an ordinary and necessary expense under §162. Source: IRC §280A(c)(6); IRC §162; IRS Chief Counsel guidance (PMTA / PLR 200120700).

⚠  “Can work” is not “automatically works.” The meeting must be genuine, the days must be fewer than 15, the rate must be a fair rental, and the business purpose and amount must be documented. A meeting created only to generate a deduction, with no real business substance, does not meet the ordinary-and-necessary standard. Source: IRC §162; IRC §6001.

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Augusta Rule — What Holds Up and What Does Not

The following summarizes the scenarios against their IRS basis. Each row is a fact statement, not a recommendation:

Scenario	Result	Why — IRS Basis
S-Corp holds a genuine, documented board or staff meeting at the owner’s home, 14 or fewer days, at a fair rental rate, with records.	Can work	Income excluded (§280A(g)); S-Corp rent is a §162 question, not barred by §280A(c)(6). Source: IRS Chief Counsel.
Primary residence AND a vacation home both qualify; owner rents each 14 days or fewer.	Each can work	§280A applies per dwelling unit; the 14-day count is tracked separately for each property. Source: IRC §280A.
Charging the business more than a fair market rate.	Does not work	A §162 deduction must be reasonable; the excess above fair rental is not deductible. Source: IRC §162; Rev. Proc. 2008-16.
Renting a property the owner does not use as a residence (a pure rental property).	Does not apply	§280A(g) requires the unit be used as a residence. Source: IRC §280A(g),(d).
Renting raw land or a vacant lot to the business.	Does not apply	§280A applies to a dwelling unit — a structure with sleeping, toilet, and cooking facilities. Land alone is not a dwelling unit. Source: IRC §280A(f)(1).
Employee rents a home office to the employer and works there as an employee.	Barred	§280A(c)(6) disallows deductions for renting to the employer while performing employee services there. Source: IRC §280A(c)(6).
Renting the residence for 15 days or more in the year.	Exclusion lost	The exclusion applies only when rented fewer than 15 days; at 15+ days the rental income is reported. Source: IRC §280A(g).

Sources as cited. Whether the Augusta Rule applies in any specific case depends on the facts. The 14 day home rental limit, the residence requirement, the dwelling-unit definition, the fair rental standard, and the documentation requirement all must be satisfied.

What the IRS Standard Requires You to Document

For any arrangement under Section 280A, records matter. IRC §6001 and IRS Publication 583 require records sufficient to establish the amount and business purpose of a deduction. Documentation generally relevant includes:

• A written rental agreement stating the dates, the amount, and the business purpose. Source: IRC §6001; Pub 583.

• Support for the fair rental amount — documentation of comparable rates for similar space in the same area. Source: Rev. Proc. 2008-16.

• Evidence the meeting or use had a genuine business purpose, since the company’s deduction must be ordinary and necessary. Source: IRC §162.

• A record of the number of rental days for each property, confirming fewer than 15 days for the §280A(g) income exclusion. Source: IRC §280A(g).

• Confirmation that each property is a dwelling unit used as a residence under IRC §280A(d),(f)(1). Source: IRC §280A(d),(f)(1).

• Retention of records until the period of limitations for the return expires. Source: IRS Publication 583.

Business Tax Preparation at Pathfinding Consultants

Pathfinding Consultants provides business tax preparation Orange County small businesses use. When owners search for tax firms near me, a tax advisor near me, or an enrolled agent near me, Pathfinding Consultants reviews tax rules against the actual facts rather than applying an idea because it is circulating online:

• Fact-specific review — whether the Augusta Rule or any Section 280A position applies depends on the facts, including how many properties are involved and whether each is a dwelling unit used as a residence.

• Documentation review — records that substantiate the amount and business purpose under IRC §6001 and IRS Publication 583, consistent with the ordinary-and-necessary standard of IRC §162.

• Honest assessment — Pathfinding Consultants will say when a popular idea does not hold up under the IRS sources, rather than filing a position that may be disallowed.

• Representation by an enrolled agent near me — Pathfinding Consultants is staffed by an enrolled agent, a tax professional authorized to represent taxpayers before the IRS.

• Pathfinding Consultants — business tax preparation Orange County. (949) 620-1036 | calendly.com/tax-pathfindingconsultants/30min

Get an honest, fact-based review

Pathfinding Consultants provides business tax preparation Orange County small businesses use, reviewing each rule against the IRS sources and your facts.

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Key Takeaways

• The Augusta Rule (IRC §280A(g)) excludes rental income when a dwelling unit used as a residence is rented fewer than 15 days in the year. Source: IRC §280A(g).

• A dwelling unit must have basic living accommodations — sleeping, toilet, cooking. Raw land or a vacant lot is not a dwelling unit and does not qualify. Source: IRC §280A(f)(1).

• With multiple homes, each dwelling unit is counted separately — the 14 day home rental count does not combine across properties, and each must independently be a residence rented fewer than 15 days. Source: IRC §280A(d),(f)(1).

• A pure rental property the owner does not use as a residence does not qualify. Source: IRC §280A(g),(d).

• An above-market rate does not work. A business rent deduction must be a reasonable, fair rental under IRC §162; the excess is not deductible. Source: IRC §162; Rev. Proc. 2008-16.

• §280A(c)(6) bars an employee from deducting rent paid by the employer for space used performing employee services. IRS Chief Counsel guidance states it refers only to the employee; an S corporation’s §162 rent deduction is not affected. Source: IRC §280A(c)(6); IRS Chief Counsel guidance.

• Renting 15 days or more loses the exclusion for that property; the rental income is reported. Source: IRC §280A(g).

• Records substantiating the amount, the day count, the dwelling-unit status, and the business purpose are required. Source: IRC §6001; IRS Publication 583.

• Whether the rule applies depends on the facts. Applying it incorrectly can result in a disallowed deduction, additional tax, interest, and penalties.

• Source: IRC §280A(g),(a),(c)(1),(c)(6),(d),(f)(1) | IRC §162 | IRC §6001 | IRS Topic 415 | Rev. Proc. 2008-16 | IRS Chief Counsel guidance | Prop. Reg. §1.280A-1(c)

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IRS DISCLAIMER:

This blog is for general informational purposes only and does not constitute tax or legal advice. The rules described have strict requirements. Applying them incorrectly can result in disallowed deductions, additional tax, interest, and penalties. Whether any rule applies depends entirely on the facts of a specific situation. Please consult a qualified tax professional before taking any tax position. For official IRS guidance visit irs.gov.