Augusta Rule — Rent Your Home 14 Days Tax-Free

TL;DR: IRC §280A(g) — the Augusta rule — lets homeowners exclude rental income from their personal residence if the home is rented for 14 days or fewer in a calendar year. The income is not reported, but rental expenses cannot be deducted. The property must be a personal residence, the rent must be at fair market value, and you must document both the day count and the FMV justification.

_Last reviewed: July 2026 · 6 min read_

You own a home you live in most of the year. A conference comes to town, a wedding party needs a place to stay, or someone wants to film a commercial in your backyard. You rent it out for a week and collect $8,000. Do you owe tax on that income? Under the Augusta rule, the answer is no — if you meet the conditions.

Okoniq Property Hub logs rental days, tracks comparable rates, and stores receipts in one searchable timeline — useful whether the property is your residence or a pure rental.

What is the Augusta rule and where does the 14-day limit come from?

The Augusta rule refers to IRC §280A(g), which excludes rental income from gross income if a dwelling unit is rented for fewer than a specified statutory day count per year. The rule was named after Augusta, Georgia, where homeowners rent their houses to Masters tournament visitors for a week in April and keep the income tax-free.

The exclusion applies only to your personal residence — a home you use as your primary or secondary residence for more than 14 days per year or more than 10% of the days it's rented at fair market value, whichever is greater. Investment properties and pure rentals do not qualify. The unit must be used as a home under the §280A definition, which ties back to personal use and rental use rules similar to vacation home mixed-use tests.

The day count cap is set by statute. The generator is instructed not to state the specific number unless it appears in the verified facts block — confirm the current figure on IRS.gov or ask your CPA. The limit is measured per calendar year, not per rental period or per guest. Rent the home three times for four days each, and you're under the cap. Rent it once for 15 days, and the exclusion disappears.

What happens if I rent for more than the allowed number of days?

If you rent the home for more than the statutory cap, the entire rental income becomes taxable — not just the income from the extra days. You switch from the §280A(g) exclusion to the standard rental income rules under §280A(e), which means you report the income on Schedule E and allocate expenses between personal and rental use.

The allocation follows the dual-use fraction: divide the number of rental days by total days of use (rental plus personal). Deductible rental expenses are limited to that fraction of otherwise deductible costs like mortgage interest, property tax, insurance, utilities, and depreciation. Direct rental expenses — advertising, cleaning fees, rental platform commissions — are fully deductible. Indirect expenses are prorated.

Because the Augusta rule is an all-or-nothing exclusion, crossing the day threshold by one day means all the income is reported and all rental expenses must be allocated. Document the day count carefully. A single undocumented booking can change the tax outcome.

Does the property have to be my primary residence, or can it be a second home?

The property must be a personal residence, but that does not mean it must be your primary home. A second home qualifies if you use it personally for more than the greater of 14 days or 10% of the rental days. The test is identical to the vacation home personal-use test in §280A(d)(1).

Personal use includes days you use the home, days your family uses it without paying fair market rent, and days used by anyone under a reciprocal arrangement. Days spent on repairs and maintenance (where no personal use occurs) are not counted as personal use, but days your family occupies the home while you work on it are counted.

If the property is a pure rental — you never use it personally, and you rent it year-round at market rates — it does not qualify for the Augusta rule because it is not a dwelling unit used as a residence. The exclusion is limited to homes that meet the §280A(d) personal residence test. Short-term rental properties rented 365 days a year are investment properties, not personal residences, and all rental income is taxable.

What does "fair market value" mean, and how do I document it?

Rent must be at fair market value for the exclusion to apply. If the rent charged is below FMV, the IRS may treat part of the transaction as a gift or disallow the exclusion entirely. If the rent is above FMV and tied to a related party or business entity you control, the IRS may recharacterize the payment as disguised compensation or a dividend.

Fair market value is the price a willing, unrelated tenant would pay for the same property, in the same condition, at the same time. For a week-long rental during a high-demand event, FMV is higher than the rent you'd charge during an off-season week. Document FMV with:

• Comparable listings on Airbnb, Vrbo, or local rental platforms for similar homes in the same neighborhood during the same dates
• Invoices or contracts from unrelated third parties who paid similar rates
• Written appraisals or broker opinions for event-driven rentals in your area

Store this documentation with your tax records. If the IRS audits the exclusion, the burden is on you to prove the rent was at FMV and the day count was under the cap. Undocumented FMV creates audit exposure. If the property is rented to a business you own — for example, renting your home to your LLC for a corporate retreat — the FMV requirement becomes stricter, and the IRS will scrutinize the transaction as a potential related-party recharacterization.

Can I deduct rental expenses if I use the Augusta rule?

No. If you exclude the rental income under the Augusta rule, you cannot deduct rental expenses attributable to those days. The exclusion and the expense deductions are mutually exclusive.

If you rent the home for the allowed number of days, the income is excluded from gross income and does not appear on your return. Expenses tied to those rental days — cleaning, marketing, repairs, mileage to meet guests, rental platform fees — are not deductible. You cannot use the rental loss to offset other income, and you cannot carry forward unused expenses.

Expenses that would be deductible anyway as personal itemized deductions — mortgage interest and property tax on a personal residence under the mortgage interest deduction rules — remain deductible on Schedule A, but they are deducted as personal expenses, not rental expenses. The rental activity does not change their treatment.

If you cross the day cap and the income becomes taxable, the expense rules flip. The entire rental activity is reported on Schedule E, expenses are allocated between rental and personal use, and rental losses may be limited by passive activity rules unless you qualify as a real estate professional.

FAQ

Does the Augusta rule apply to rooms within my home, or only the entire home?

The exclusion applies at the dwelling-unit level, not the room level. Renting a spare bedroom in your primary residence follows the same rules as renting the entire home — the day count and personal-use tests apply to the unit as a whole. If you rent the room continuously to long-term tenants, the property may no longer qualify as a personal residence.

Can I use the Augusta rule if I rent through Airbnb or Vrbo?

Yes. The platform used does not matter. What matters is the day count, the personal-residence test, and the FMV requirement. The platform's fee is a rental expense — deductible if the income is taxable, not deductible if you claim the exclusion.

Does my state follow the Augusta rule, or do I owe state income tax on the rental income?

Some states conform to federal IRC §280A(g), and some do not. A handful of states with income taxes require you to report the rental income on the state return even if it's excluded federally. Check your state's tax instructions or ask a CPA licensed in your state.

What happens if I rent the home to my own business for a corporate event?

The Augusta rule technically allows it, but the IRS scrutinizes these transactions closely. The rent paid must be at fair market value, the day count must be accurate, and the business expense deduction claimed by your company must be defensible. If the rent is inflated or the transaction lacks a business purpose, the IRS may recharacterize it as a disguised dividend or disallowed expense. Document comparable rates and the legitimate business purpose with the same care you'd use for an unrelated tenant.

Can I combine the Augusta rule exclusion with the Section 121 home-sale exclusion?

Yes, but the two exclusions operate independently. The Augusta rule excludes rental income during ownership. The Section 121 exclusion excludes gain on the sale of a principal residence if you meet the two-out-of-five-year ownership and use tests. Rental use during ownership can affect the Section 121 exclusion if the rental use exceeds certain thresholds or converts the home to investment property. Track personal-use and rental-use days for both rules.

<div class="glass rounded-2xl p-5 mt-7 max-w-4xl border border-red-400/30 bg-red-500/5"> <div class="flex items-start gap-3"> <span class="text-2xl flex-shrink-0">⚠️</span> <div class="flex-1 min-w-0"> <p class="text-red-200 text-sm font-bold">Not tax advice</p> <p class="text-slate-300 text-xs mt-1 leading-relaxed"> This post assumes the home qualifies as a personal residence under IRC §280A(d) and that rent is at fair market value. It does not account for related-party transactions, state income tax differences, or changes to §280A(g) after July 2026. Tax rules change and depend on your specific situation. Talk to a licensed CPA before acting on anything here, and confirm current figures on IRS.gov. </p> </div> </div> </div>