The Augusta Rule: Rent Your Home Tax-Free During Tournament Week

Spring in the CSRA means blooming azaleas, heavy traffic on Washington Road, and the arrival of the most famous golf tournament in the world. For locals, this time of year is the perfect excuse to skip town and let your house cover the cost of your vacation.

If you are planning an Augusta tournament rental this year, you need to know about a unique piece of the tax code that was quite literally written for our city: The Augusta Rule.

Whether you are renting to a corporate sponsor for the week or considering turning your property into a short-term rental for the tournament duration, here is how you can legally maximize your earnings and minimize your tax liability.

What is the Augusta Rule (Section 280A)?

In the 1970s, residents of Augusta lobbied Congress to protect the income they earned from renting their homes to tournament patrons. They argued that renting out a primary residence for just a few days out of the year shouldn’t turn a family home into a taxable business.

Congress agreed and created Section 280A of the Internal Revenue Code, otherwise known as the Augusta Rule.

Clients ask us every year: “Do I have to pay taxes on rental income?” The answer depends entirely on your timeline. The Augusta Rule—also known as the 14 day rental rule—states that if you rent out your personal residence for 14 days or fewer during the year, that income is completely tax-free. You do not even have to report it on your tax return.

However, because the IRS gives you a complete pass on the income, you cannot deduct any expenses associated with the rental. You cannot write off the cost of a cleaning service, new linens you purchased, or the landscaping you had done to prepare the house for visitors. For most homeowners, however, the tax-free income far outweighs those potential deductions.

What Happens if You Rent for 15 Days or More?

This is where many homeowners accidentally trigger a massive tax bill. If a patron asks to extend their stay by just one extra day—pushing your total rental days to 15—the Augusta Rule no longer applies. Suddenly, all 15 days of income become fully taxable.

If you decide to cross this threshold, your home is now treated as a short-term rental property, and standard rental tax rules apply. While paying taxes on this income isn’t ideal, a savvy CPA can help you deploy some strategies to soften the blow.

Here are a few housing rental tax tips if you rent for 15 days or more:

• Deduct Your Direct Expenses: Unlike with the 14-day rule, crossing the 15-day mark means you can legally deduct ordinary and necessary business expenses. You can write off cleaning fees, property management commissions, photography costs, and advertising spend.
• Prorate Your Household Costs: You can deduct a portion of your mortgage interest, property taxes, utilities, and internet bills based on the percentage of the year the home was rented.
• Calculate Depreciation: You can even take a depreciation deduction for the wear and tear on your home and the furniture inside it for the days it was used as a rental.

You can significantly lower the net taxable income from your extended rental by carefully tracking these deductible expenses.

Planning Your Tournament Week Rental Strategy

Grasping the Augusta Rule and what it means can really impact how much of your rental income stays in your pocket. Whether you’re renting out for tournament week or need help managing deductions for a longer-term rental, SME CPAs can guide you through the process.

As a local firm rooted in the CSRA, we know exactly how to structure your finances so you can make the most out of Tournament Week without worrying about the IRS. Get in touch with SME CPAs today to review your rental strategy before April arrives.