One of my favorite tax strategies isn't flashy.
It doesn't involve a cost segregation study. It doesn't require buying a rental property. And it doesn't require tracking hundreds of hours.
It's called the Augusta Rule.
Most investors hear about it once, think it sounds too good to be true, and move on. I almost did the same thing.
Then I started looking at how it could actually apply to situations I already had in my business.
The result? I've personally used the Augusta Rule in two completely different ways.
Let's start with what the rule actually is.
What is the Augusta Rule?
The Augusta Rule comes from Section 280A(g) of the tax code.
In simple terms, it allows homeowners to rent out their personal residence for up to 14 days per year without reporting that rental income on their personal tax return, assuming the requirements are met.
Business owners often use this strategy when their business has a legitimate need for meeting space.
The business pays rent. The business may receive a deduction. The homeowner receives rental income. Under the right circumstances, that rental income may not be taxable.
As always, discuss your specific situation with your CPA or tax advisor before implementing any tax strategy.
Now let's talk about how I actually used it.
Example 1: hosting a mastermind at my house
A few years ago, I hosted a mastermind event for paying students in one of my businesses.
The business had a legitimate reason to hold the event. We had attendees. We had an agenda. We had training sessions. We had discussions and planning activities.
Instead of renting a hotel conference room or event space, we used my personal residence.
The business rented the property for the event. The business also paid for legitimate event-related expenses including catering and other mastermind costs.
From the business perspective, there was a real business event with real business expenses. From my personal perspective, I was renting my home for a qualifying business purpose.
The result was a much better outcome than simply paying for an expensive event venue.
The biggest lesson? Documentation matters.
We maintained records of the event, attendees, schedules, and business purpose.
If you're considering a similar strategy, talk with your tax advisor before the event occurs.
Example 2: renting my house while we were in Moab
This one had nothing to do with a business. It involved a family trip.
Several years ago, we planned a trip to Moab, Utah. Rather than letting our house sit empty, we rented it out for a short period while we were gone.
The income from that rental essentially paid for our entire vacation.
That felt pretty amazing at the time. The house generated income. The trip was covered. Everybody wins.
At least that's what I thought.
What I learned afterward was that the money wasn't the hard part. The hard part was preparing my personal home for guests.
Cleaning. Organizing. Moving personal items. Preparing the property. Coordinating the stay. Managing the logistics.
By the time it was over, I realized something. Just because a strategy works doesn't mean it's something I want to repeat.
Would I do it again? Probably not.
The income was great. The disruption wasn't worth it for me personally.
That's an important lesson many tax articles leave out. A strategy can be technically correct and still not fit your lifestyle.
Common Augusta Rule mistakes
Whenever I talk about this strategy, I see people make the same mistakes.
Mistake 1: making up a rental rate
The rental rate should be reasonable and supportable. Research comparable meeting venues and event spaces in your area. Save documentation.
Mistake 2: no business purpose
The event should have a legitimate business reason. A family gathering is not suddenly a board meeting because you printed an agenda.
Mistake 3: poor documentation
Maintain:
- Agendas
- Attendee lists
- Meeting notes
- Calendar records
- Comparable venue pricing
The more organized your records, the stronger your documentation.
Augusta Rule action plan
If you're a business owner, here's what I'd do this week.
Step 1. Review every meeting, retreat, workshop, training session, or planning day your company holds annually.
Step 2. Determine whether your home could reasonably serve as a meeting venue.
Step 3. Research comparable venue rental rates in your area. Take screenshots and save pricing information.
Step 4. Discuss the strategy with your CPA before implementing it.
Step 5. Create a documentation process before the event happens. Not afterward.
Final thoughts
One thing I've learned over the years is that tax strategies are most valuable when they fit your actual life.
The Augusta Rule worked well for my mastermind. It also worked when we rented our home during a family trip. But those were two completely different situations.
The lesson isn't that everyone should use the Augusta Rule. The lesson is that opportunities often exist inside activities you're already doing.
Sometimes the smartest tax strategies aren't about creating something new. They're about structuring something you're already doing in a more intentional way. That same logic is why so many business-owning parents end up paying their kids from the family business, and why I built Kids Payroll to handle the paperwork that keeps a strategy like that audit-ready.
If you want more ideas like this, take a look at the tax strategies real estate investors wish they learned earlier and 8 missed tax opportunities for real estate investors.
Disclaimer: This article is for educational purposes only and should not be considered tax, legal, or accounting advice. Consult your CPA, EA, or tax advisor regarding your specific circumstances before implementing any tax strategy.
