If you operate an S corporation, a C corporation, or a partnership—any entity treated as separate from you for federal tax purposes—IRC Section 280A offers a compelling planning opportunity under what is commonly called the Augusta Rule: rent your home to your corporation or partnership for 14 days or less during the year, and the rent you receive is completely tax-free.

The corporation or partnership deducts the full rental payment as an ordinary business expense.

You report zero net income from the rental on your personal return.

The numbers could add up fast. For example, if the fair rental of your home is $1,500 per day and you rent your home to your S corporation for 14 days, the corporation takes a $21,000 deduction.

Because S corporation deductions pass through to you, ... Log in to view full article.