There is a provision allowing a taxpayer to rent a personal residence for a small number of days a year without including the rental income in gross income. It is frequently called the Augusta rule, it is narrow, and it is one of the most commonly misapplied items in real estate tax conversations.
My BnB Accelerator, LLC is a real estate acquisition firm, not a CPA firm. This is a plain English explanation, not tax advice, and outcomes depend entirely on individual facts. Our tax partner is AE Tax Advisors, an independent firm.
What the provision does
Section 280A contains a limited exception for a dwelling unit used as a residence and rented for fewer than fifteen days during the tax year. In that circumstance, the rental income is generally not included in gross income, and correspondingly the deductions attributable to that rental use are generally not allowed.
The common name comes from homeowners near a well known golf tournament renting their homes for tournament week. The provision applies far more broadly than that, and far more narrowly than internet advice suggests.
What it is not
- It is not the short-term rental strategy. Those are opposite structures. This provision excludes income from a residence rented briefly. The short-term rental strategy involves an investment property rented continuously with the objective of generating a deductible loss. See the complete STR tax savings guide.
- It is not a way to make a rental property tax free. A property rented for more than fourteen days is outside the provision entirely.
- It is not a substitute for documentation. Any arrangement, including renting to a business you own, needs to reflect fair rental value with contemporaneous support.
Small provisions add up alongside the main strategy
We introduce clients to a tax partner during acquisition so the whole picture gets built at once rather than in pieces.
Apply NowWhere it actually fits
For our clients, it is generally relevant to the home they live in rather than to their investment property. A household near a major event, a convention city, or a university town may have a genuine opportunity, and business owners occasionally use it in connection with legitimate business use of a personal residence.
Both applications require the same discipline: a documented fair rental value supported by comparable evidence, a real arrangement rather than a paper one, and records that would make sense to someone reading them later. See documentation that holds up.
The interaction with an investment property
An investment short-term rental generally is not a residence for these purposes and generally will not be rented fewer than fifteen days a year, so the provision does not apply to it in the ordinary case.
Where it does become relevant is the personal use question in reverse: if you use an investment property personally, the dwelling unit rules and the allocation of expenses come into play, which is a different part of the same code section. See personal use days.
The practical guidance
Treat this as a small, specific provision that may apply to your personal residence, evaluated by a CPA against your facts. It is not part of the short-term rental investment strategy and pairing them in conversation causes more confusion than benefit.
If someone presents it as a way to make short-term rental income tax free, that is a signal to slow down and get a second opinion. See our partner firm's material on short-term rental tax strategy.
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Frequently asked questions
What is the 14-day home rental rule?
Section 280A contains a limited exception where a dwelling unit used as a residence and rented for fewer than fifteen days in the tax year generally does not include the rental income in gross income, with the corresponding deductions attributable to that rental use generally not allowed.
Does the 14-day rule apply to my Airbnb investment property?
Generally no. An investment short-term rental is typically not a residence for these purposes and is generally rented far more than fourteen days a year, so the provision does not apply in the ordinary case. It is a personal residence provision, not an investment strategy.
Is the 14-day rule the same as the short-term rental tax strategy?
No, they are opposite structures. The fourteen day provision excludes income from a residence rented briefly. The short-term rental strategy involves an investment property rented continuously, with material participation and accelerated depreciation producing a deductible loss.
What documentation does the 14-day rule require?
A documented fair rental value supported by comparable evidence, a real arrangement rather than a paper one, and contemporaneous records. Any arrangement, including renting to a business you own, needs to reflect genuine terms that would make sense to someone reading them later.