Article / Tax strategy and the Augusta Rule

Rent your home to your practice for 14 days. Tax free.

Under the Augusta Rule, a homeowner who rents their residence for fewer than 15 days a year generally does not report the rental income. For a practice owner, that is up to 14 days of legitimate business use, if it is done properly.

Austin MoffatAustin MoffatFounder, DSO CFO
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Your practice can rent your home

There are tax strategies I talk about with practice owners that sound almost too simple to be useful. This is one of them.

Under the rules commonly referred to as the Augusta Rule, a homeowner who uses their home as a residence and rents it for fewer than 15 days during the year generally does not report that rental income. That means a dentist may be able to rent their home to their own practice for up to 14 days a year, provided the arrangement is legitimate and properly structured.

Think about the situations where the practice might legitimately need a space outside the office: a leadership meeting, a planning session, a team retreat, a strategy day. If your home is actually being rented to the practice at a reasonable fair-market rate, the practice may have a legitimate business expense while the rental income can fall under the less-than-15-day exception.

This is where I tell practice owners to slow down. You cannot pick a number, write yourself a check, and call it the Augusta Rule. There needs to be a real business purpose, a reasonable rental rate, documentation, and records supporting the transaction.

Real purpose. Market rate. Records.Fourteen days is the limit, not the strategy.
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The bigger lesson is not the 14 days

What I find more interesting is what this says about tax planning in general. Most practice owners are looking for the big strategy: the big retirement contribution, the big equipment purchase, the big deduction. Some of the most useful opportunities are much smaller.

They do not necessarily save hundreds of thousands of dollars on their own, but they add up when they are part of a larger financial plan. The Augusta Rule is one example. Retirement plan design, entity structure, equipment timing, real estate and income planning deserve the same kind of attention.

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Small wins compound

I do not look at a strategy like this and think it will change your financial life. It probably will not. That is not the point. If your practice is already profitable, you should be looking for every legitimate opportunity to make the tax and financial structure more efficient.

Fourteen days will not make you wealthy. But ignoring small legal opportunities year after year gets expensive. The best tax planning I have seen is not about chasing one giant write-off. It is about stacking the small, legitimate wins until they become meaningful.

I would rather find six smaller strategies that actually fit your situation than force one big strategy that does not.

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Frequently asked questions

What is the Augusta Rule?
A provision that lets a homeowner rent their residence for fewer than 15 days a year without reporting the rental income. A practice owner can use it to rent their home to their own practice for genuine business events, up to 14 days a year, at a fair-market rate.
What does my practice need to document?
A real business purpose for each day (a meeting agenda, attendees, outcomes), a rental rate supported by comparable local venues, a written rental agreement, and proof of payment from the practice to you. Without those, the deduction and the exclusion are both at risk.
How much can the practice pay?
A reasonable fair-market rate for comparable meeting space in your area, for the actual days used. Inflating the rate or the number of days is the fastest way to lose the benefit. Your CPA can help set a defensible figure.
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