December 2024
Dear Client:
The Augusta rule gets its name from the Masters Golf Tournament, where some members and others who live in the area receive tax-free rent by renting their homes for a week or two. You don’t have to live in Augusta to benefit from this rule.
IRC Section 280A(g), also known as the Augusta rule, states:
“Notwithstanding any other provision of this section or section 183, if a dwelling unit is used during the taxable year by the taxpayer as a residence and such dwelling unit is actually rented for less than 15 days during the taxable year, then:
no deduction otherwise allowable under this chapter because of the rental use of such dwelling unit shall be allowed, and
the income derived from such use for the taxable year shall not be included in the gross income of such taxpayer under section 61.”
Example. Fred rents his home at $3,000 a day for 14 days. Under the Augusta rule, he qualifies for no rental deductions. But he also excludes all the rent, the full $42,000 ($3,000 x 14) from his income.
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