What is the Augusta rule, and can creators use it?
Short answer
The Augusta rule lets you rent out your home for up to 14 days a year without reporting that rent as income. If your S-Corp or partnership rents your home for real business use, like a shoot or a team meeting, the business may be able to deduct the rent.
Otavio Mayole, Co-founder, DeCypher FinancialsUpdated
How it works for creators:
- Your business rents your home for a specific business purpose: a brand shoot, a planning day with your editor, a team meeting.
- The business pays you fair rent for those days.
- The business deducts the rent, and you don't report it as income, as long as the home was rented for 14 days or fewer that year.
Who it works for: creators whose business is an S-Corp or a partnership. If you're a sole proprietor, you can't rent your home to yourself.
What makes it hold up:
- Fair rent. Get quotes from comparable local venues and keep them.
- Real business use. An agenda, a shot list, attendees.
- Payment from the business account with an invoice.
- Days that aren't already part of your home office.
The IRS looks closely at this strategy when it's done carelessly. Done right, it's legitimate.
These are not guarantees. Every creator's situation is different.