Tax-Free Rental Income with the Augusta Rule

Written by Coach Janelle CPA on November 1, 2023

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—

1 no deduction otherwise allowable under this chapter because of the rental use of such dwelling unit shall be allowed, and 

2. the income derived from such use for the taxable year shall not be included in the gross income of such taxpayer under section 61.”

Here’s an example: John rents his home at $3,000 a day for 14 days. By applying the Augusta rule, he qualifies for no rental deductions. But, and this is the good news, he excludes the rent, $42,000 ($3,000 x 14) from his income.

Ready to transform your rental income into tax-free earnings?

Are you prepared to convert your rental income into tax-free profits? At Coach Janelle CPA, we are experts in tax strategy planning, ready to assist you in navigating the Augusta Rule. Enhance your deductions on rental properties and unveil the opportunity for tax-free earnings. Commence your journey with Coach Janelle CPA and observe your financial outlook undergo a transformation. Reach out to us today for tailor-made guidance.

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