Quick answer: If you use a home as a residence and rent it out for fewer than 15 days in a year, you do not report that rent as income on your federal tax return, and you do not deduct any rental expenses for it. This is 26 U.S.C. §280A(g), often called the Augusta Rule. It covers federal income tax only. Your city, county and state can still require a short-term rental permit and charge lodging tax on those stays.
Key Facts
| Fact | Detail |
|---|---|
| Rule | 26 U.S.C. §280A(g), "Special rule for certain rental use" |
| What it does | Rent from fewer than 15 days of rental in a year is left out of federal gross income |
| Trade-off | No rental expenses may be deducted for those days |
| Who qualifies | Anyone who uses the dwelling unit as a residence during the year (not only a primary home) |
| Residence test | Personal use of more than 14 days, or more than 10% of the days rented at a fair price, whichever is greater |
| What it does not cover | State income tax, local permits, lodging and occupancy taxes, zoning and HOA rules |
| Official guidance | IRS Tax Topic 415 and Publication 527 |
What the Rule Says
IRS Tax Topic 415 puts it plainly: "There's a special rule if you use a dwelling unit as a residence and rent it for fewer than 15 days. In this case, don't report any of the rental income and don't deduct any expenses as rental expenses."
The rule comes from Section 280A(g) of the Internal Revenue Code. It applies only when the home is "actually rented for less than 15 days during the taxable year." Rent it for 15 days or more and the normal rental rules apply: the rent is reported and expenses are split between personal and rental use.
The name comes from Augusta, Georgia, where homeowners rent their houses to visitors during the Masters golf tournament each April.
Who Qualifies
The rule is not limited to a primary residence. It applies to any dwelling unit you use as a residence during the year, which can include a vacation home or second home.
Under the IRS test, you use a unit as a residence if your personal use is more than the greater of:
- 14 days, or
- 10% of the days you rent it to others at a fair rental price.
A personal-use day is any day the home is used by you or another owner, by a member of your family or another owner's family, by someone under an arrangement that lets you use their home in return, or by anyone paying less than a fair rent.
What the Rule Does Not Change
The Augusta Rule is a federal income tax rule. It does not exempt those stays from local short-term rental law:
- Permits and registration. If your city or county requires a short-term rental permit, you need it even for a few nights a year.
- Lodging and occupancy taxes. State and local lodging taxes usually apply to stays under 30 days, whatever your federal tax treatment. Booking platforms often collect them.
- Zoning, HOA and lease rules. A zone or deed restriction that bars short-term rentals still applies.
- State income tax. States set their own rules on whether this rent is taxable.
Check the rules for your place on the LawfulStay directory before you list.
What Hosts Should Do Now
- Count your rental days. The rule applies only if the home is rented for fewer than 15 days in the tax year.
- Count your personal-use days. You must use the home as a residence under the 14-day or 10% test.
- Check local permits and taxes. Look up your city or county on LawfulStay; a short rental can still need a permit and lodging tax.
- Keep records. Keep booking dates, rents and personal-use dates in case you need to show you qualify.
- Talk to a tax professional about your situation, including arrangements such as renting a home to your own business.
Frequently Asked Questions
Do I pay tax on renting my house for 14 days?
Not federal income tax, if you also use the home as a residence. Under IRS Tax Topic 415, rent from a dwelling unit you use as a residence and rent for fewer than 15 days is not reported, and the related rental expenses are not deducted. State and local taxes can still apply.
Does the Augusta Rule only apply to my primary residence?
No. It applies to any dwelling unit you use as a residence during the year, which can include a second home, as long as your personal use passes the 14-day or 10% test.
Do I still need a short-term rental permit for a 14-day rental?
Usually, yes, if your city or county requires one. The Augusta Rule only affects federal income tax. Local permits, lodging taxes and zoning rules still apply.
What happens if I rent for 15 days or more?
The special rule no longer applies. You report the rental income and may deduct rental expenses, divided between personal and rental use, under the normal rules in IRS Publication 527.
Sources
- IRS Tax Topic 415, Renting residential and vacation property, Internal Revenue Service
- 26 U.S.C. §280A, Legal Information Institute, Cornell Law School
- IRS Publication 527, Residential Rental Property, Internal Revenue Service
This is general information, not tax advice.