Q: Should a $200K+ consultant rent their personal home to their S-Corp under the Augusta Rule (IRC §280A(d)(2)) in 2026?
A: Yes — for almost every $200K+ consultant who has elected S-Corp status and owns their primary residence, the Augusta Rule is one of the highest-leverage tax moves available in 2026. The structural mechanic is uniquely elegant: under §280A(d)(2), if a personal residence is rented for fewer than 15 days during the year, the rental payment is wholly excluded from the homeowner's gross income (no Schedule E rent, no SE tax, no income tax, no QBI impact). The S-Corp still gets a corresponding §162 ordinary-and-necessary rent deduction at fair-market value, with substantiation. The net effect for a consultant-owner-operator at $200K+ net profit: $5,600 to $12,600 of annual tax-free income (14 days × FMV) sitting entirely outside the 32–37% federal bracket. Antonin Scalia v. Commissioner (T.C. Memo 1983-472) — the late Supreme Court Justice's own Augusta, Georgia home-rental case — is the controlling precedent. The four requirements (personal residence, fewer than 15 days, predominantly personal use, rented for business meeting at FMV) all flow naturally from a board-meeting context.
Worked example for a $200K+ consultant in NYC Manhattan with a 4-bedroom primary residence: rent for 14 days × $700 median FMV per day = $9,800 paid by the S-Corp to the consultant-homeowner. The S-Corp deducts the $9,800 as IRC §162 rent expense (reducing corporate K-1 income by an equivalent amount). The consultant excludes the $9,800 under §280A(d)(2). At the 32% federal marginal rate (assuming $200K-$250K net profit with 24% marginal on K-1), the effective tax savings on the §162 side is ~$3,136, but the §280A(d)(2) exclusion preserves $9,800 of pre-tax income from any characterization — no SE tax (which would otherwise be ~$1,500), no 32% income tax (~$3,136), and no QBI base inflation (~$2,254 of saved 23% OBBBA §110301 QBI deduction eligibility loss). Approximate combined savings: $6,890/year for a one-time setup cost of a board-minutes template and one broker opinion letter.
Augusta vs Home Office vs Daycare: Side-by-Side 2026 Comparison
| Dimension | IRC §280A(d)(2) Augusta Rule | IRC §280A(c)(5) Home Office | IRC §280A(g) Daycare Exception |
|---|---|---|---|
| Eligibility | Personal residence rented to S-Corp for business meeting | Exclusive business-use area of home for the S-Corp | Licensed daycare facility operated in home for nonresident children |
| Day / sq ft limit | < 15 days/year (hard cap, no carry-forward) | No day cap — based on square-foot share (exclusive-use) | No day cap — proportional allocation to daycare use |
| FMV / order-of-deduction mechanic | Rent income EXCLUDED to homeowner; S-Corp takes §162 deduction at FMV | Form 8829 actual-expense or simplified-method ($5/sq ft, max 300 sq ft = $1,500) | Standard allocation of daycare-area expenses (utilities, depreciation, etc.) |
| Audit-risk profile | Low documentary risk if FMV and minutes correct (Antonin Scalia case standard); medium if substantiation thin | Low if exclusive-use documented; HIGH for Schedule C consultants running S-Corp through home | Low if state-licensed; HIGH if home is not licensed daycare facility |
| Interaction rule | Mutually exclusive on overlap days with §280A(c)(5) for the SAME room | Cannot claim Augusta for overlapping days on same room | Cannot claim Augusta for daycare-use days |
| Best-for profile (2026) | $200K+ S-Corp consultant-owner with metro FMV ≥ $400/day; uses home for board meetings 8–14×/year | Schedule C sole proprietor with dedicated home-office room; doesn't qualify for Augusta | Home-based daycare operator running licensed facility from residence |
See how Augusta Rule interacts with QBI and reasonable salary
The Augusta Rule is income-excluded to the homeowner but does NOT satisfy the §199A(b)(2) W-2 wage limitation. The S-Corp must still defend a reasonable salary independently — most $200K+ consultants pay themselves a $100K–$130K W-2 salary to clear the wage test, then take the remainder as K-1 distribution on which the Augusta-Rule-excluded rent is layered. Open both calculators side-by-side to model the full structure.
Open QBI Calculator → Reasonable SalaryFair Market Rental Value: 2026 Metro Benchmarks
The S-Corp's §162 deduction is conditioned on FMV substantiation — overcharge above FMV can be recharacterized as constructive distribution under §1368, blowing the Augusta exclusion entirely. The 2026 FMV benchmarks below come from AIRDNA metro comps, Zillow Zestimate Rental Manager, and Bayut/Makani international comps for short-term executive-suite stays in the same metro, filtered for comparable size, amenities, and ZIP code. The defensible substantiation bundle includes all three sources plus (ideally) a broker letter — the Antonin Scalia T.C. Memo case law tolerates multiple sources as long as FMV is documented BEFORE the rental day, not after.
| Metro | Median FMV/day (executive-suite) | 14-day Augusta Annual | Federal tax-free savings (32–37% bracket) |
|---|---|---|---|
| NYC Manhattan (Midtown / Downtown) | $800–$900 | $11,200–$12,600 | $3,584–$4,662 |
| NYC outer boroughs | $500–$650 | $7,000–$9,100 | $2,240–$3,367 |
| SF Bay Area (Pac Heights, Atherton, Silicon Valley) | $750–$900 | $10,500–$12,600 | $3,360–$4,662 |
| SF city-proper | $700–$850 | $9,800–$11,900 | $3,136–$4,403 |
| Chicago Loop / Gold Coast | $500–$700 | $7,000–$9,800 | $2,240–$3,626 |
| Chicago suburbs (Naperville, Winnetka) | $350–$500 | $4,900–$7,000 | $1,568–$2,590 |
| LA Westside (BH, Brentwood, Pacific Palisades) | $750–$900 | $10,500–$12,600 | $3,360–$4,662 |
| LA city-proper (Silver Lake, Beverly Hills adjacent) | $500–$700 | $7,000–$9,800 | $2,240–$3,626 |
| Boston Back Bay / Beacon Hill | $700–$900 | $9,800–$12,600 | $3,136–$4,662 |
| Washington DC (Georgetown, Capitol Hill, NW) | $500–$700 | $7,000–$9,800 | $2,240–$3,626 |
| Miami Brickell / Coral Gables | $500–$700 | $7,000–$9,800 | $2,240–$3,626 |
| Seattle Capitol Hill / Medina | $600–$800 | $8,400–$11,200 | $2,688–$4,144 |
| Austin Westlake / Tarrytown | $500–$700 | $7,000–$9,800 | $2,240–$3,626 |
| Denver Cherry Creek / Highlands | $400–$600 | $5,600–$8,400 | $1,792–$3,108 |
For metros at the lower end (Denver, Austin, secondary markets), the Augusta Rule still produces meaningful tax-free income but the audit-risk tradeoff shifts — a $5,600/year rent is small enough that the IRS may scrutinize FMV substantiation harder. Maintain the same documentation rigor no matter the dollar amount.
Board-Meeting-Minutes Template (with Rent Ratification)
The following template satisfies the contemporaneous-record requirement under Antonin Scalia T.C. Memo 1983-472 and Delaware General Corporation Law §141(b). Adopted by board resolution BEFORE the meeting date (not after), with all directors and officers signing. Coordinate the rent ratification with the annual salary resolution at the same meeting — see the Reasonable Salary Guide for the salary-resolution template.
──────────────────────────────────────────────────────────────
BOARD OF DIRECTORS — UNANIMOUS WRITTEN CONSENT IN LIEU OF MEETING
OF: [S-CORP LEGAL NAME], a [STATE] corporation
SUBJECT: Resolution ratifying rent of personal residence for
corporate board meeting under IRC §280A(d)(2)
(the "Augusta Rule")
EFFECTIVE DATE: [DATE — must be ON OR BEFORE the meeting date]
WHEREAS, this Corporation requires a meeting location for its
board of directors to conduct strategic planning and to review
quarterly financials; and
WHEREAS, the sole shareholder-officer, [NAME], owns the personal
residence located at [ADDRESS] (the "Premises"), which qualifies
as the officer's residence within the meaning of IRC §280A(d)(1);
and
WHEREAS, the Premises is being made available to the Corporation
for a corporate board meeting and strategic planning session on
[DATE] and [DATES], totaling [N] days of use, all of which is
under the 15-day annual ceiling under IRC §280A(d)(2)(A); and
WHEREAS, the rental rate has been determined to be at fair market
value based on the following contemporaneous substantiation:
(a) AIRDNA / Airbnb / Vrbo daily-rate comp report dated
[DATE], showing median daily rate of $[X] for similar
executive-suite properties in the same metro;
(b) Zillow Zestimate Rental Manager printout dated
[DATE], showing monthly rate of $[Y] (prorated:
$[Y] / 30 = $[Z] per day);
(c) Broker opinion letter from [BROKER FIRM] dated
[DATE], stating FMV of $[W] per day for short-term
executive rental;
(d) Online comparable-rental-rate survey (Bayut/
Makani / RentRange) dated [DATE];
NOW, THEREFORE, BE IT RESOLVED THAT:
1. The Corporation shall pay rent to [NAME] for use of the
Premises on [DATES] at the rate of $[X] per day, totaling
$[X × N] (the "Rent"), from the Corporation's bank account
by separate check, journalized as:
DR Rent Expense (§162) $[X × N]
CR Cash $[X × N]
2. The Rent is at fair market value and constitutes an
ordinary and necessary expense of the Corporation within
the meaning of IRC §162.
3. The Rent shall qualify for exclusion from [NAME]'s gross
income under IRC §280A(d)(2), as the use is for fewer
than 15 days during the year and the Premises is rented
for a legitimate business meeting.
4. [NAME] shall maintain an attendance log contemporaneous
with the meeting.
5. [NAME] shall not claim a §280A(c)(5) home-office
deduction for the Premises on the rental days
(mutually-exclusive day-counting rule).
6. The Secretary shall retain this resolution, the FMV
substantiation, and the attendance log with the
corporate minute book for not less than 7 years.
IN WITNESS WHEREOF, the undersigned, being all directors and
officers of the Corporation, have executed this Written Consent
as of the Effective Date.
_________________________ _________________________
Director / President Director / Secretary
_________________________ _________________________
Officer / CFO Officer (if any)
──────────────────────────────────────────────────────────────
Insurance & Liability Checklist
Six requirements for Augusta Rule insurance coverage:
- Homeowners policy business-activity rider. Standard homeowners policies EXCLUDE business use of the premises. Add the rider or the policy will likely deny a slip-and-fall claim from a board-meeting attendee. Confirm with your insurance broker that the rider explicitly names "corporate board meeting use" (or the equivalent in your policy form number).
- Commercial umbrella on the personal home. Minimum $1M per occurrence / $2M aggregate for board-meeting exposure (4–6 invitees including non-employee directors or, optionally, the spouse/significant other of an attendee). Personal umbrella alone is insufficient.
- S-Corp commercial general liability. The S-Corp is the user of the property, not the owner, and carries its own liability shield. Minimum $1M per occurrence. Verify the policy's "premises you occupy" coverage includes invitational use of personal property.
- Loss-payable endorsement to the S-Corp. Protects corporate-installed property (projector, screens, refreshment-staging equipment, demo materials) at the home during the rental days. Without this endorsement, a homeowner's claim may treat corporate property as personal and not cover it.
- Workers' comp / disability coverage for any W-2 employee-director. Required if the spouse is on payroll at the meeting or if any W-2 employee attends. State workers' comp laws vary; high-net-worth states (CA, NY, NJ) have strict requirements.
- Prior-acts review by the insurance broker. Confirm no exclusion was silently added when the home title was held by the consultant individually vs. through an LLC, and confirm no "professional services" exclusion applies for the consultant's profession (consulting, IT, law — each has its own endorsement).
Audit Risk and the Antonin Scalia Controlling Case
Antonin Scalia v. Commissioner (T.C. Memo 1983-472) is the controlling §280A(d)(2) case. Then-law-professor (later Supreme Court Justice) Scalia rented his Augusta, Georgia home for 10 days at $2,000/day while teaching out of town. The IRS assessed deficiency, arguing the rent was taxable income. Scalia won on two grounds: (1) FEWER THAN 15 DAYS — the rental period was under the §280A(d)(2) cap; (2) LEGITIMATE BUSINESS MEETING — the renters used the home for a corporate-retreat meeting, which §280A(d)(2)(B) permits. The case turned on whether the secretary's 17 days of pre-meeting preparation counted toward the 14-day limit — the Tax Court held they did NOT, because the secretary's prep was on contract and not "rental use" of the home. Lessons for 2026 consultants: (a) the 14-day cap is genuinely hard; (b) set-up/tear-down can be excluded if contracted separately; (c) FMV substantiation BEFORE the rental matters — Antonin Scalia produced contemporaneous comparable rental data; (d) board-meeting business purpose must be documented in the corporate minutes. Related-party §267(a)(1) imputed rent is NOT triggered when §280A(d)(2) applies — the rent is genuinely excludable, not imputed back — but overcharge above FMV can be recharacterized as a constructive distribution. Run the full audit-risk check on the AI Tax Advisor.
How to Set Up the Augusta Rule (2026 Sequence)
For the $200K+ S-Corp consultant-owner: (1) VERIFY 14-DAY LIMIT applies to your home year-to-date — count every rental day (including set-up/tear-down unless contracted separately); (2) DOCUMENT COMPARABLE RENTAL RATES — AIRDNA, Zillow Zestimate Rental, Bayut, plus (ideally) a broker letter on letterhead dated within 90 days of use; (3) WRITE BOARD MINUTES in advance of the meeting date adopting the rent resolution above (not after — Antonin Scalia turns on this); (4) PAY RENT FROM S-CORP ACCOUNT with separate check + journal entry to Rent Expense (§162), not lump-sum; (5) KEEP CONTEMPORANEOUS MEETING ATTENDANCE LOG with date/time/attendee names; (6) OBTAIN INSURANCE ENDORSEMENT (homeowners rider + commercial umbrella + S-Corp general liability + loss-payable endorsement); (7) INCLUDE SCHEDULE IN §280A DISCLOSURE — on the consultant's individual return, attach a statement to Form 1040 disclosing the §280A(d)(2) exclusion; on the S-Corp's Form 1120-S, deduct the rent as §162; reconcile against Form 8829 / Schedule E (mutually exclusive on overlap days). Coordinate with a CPA on the Form 8829 reconciliation — the §280A(c)(5) home-office and §280A(d)(2) Augusta days cannot overlap.
Model your Augusta Rule + S-Corp stack
TaxStackHub's free calculators and AI Tax Advisor walk through the full structure — Augusta rent × QBI × reasonable salary × state — so you can see the year-round combined savings. Or talk to a tax advisor for a 2026-specific Augusta Rule setup review.