The rental
Tax rates (editable)
Costs and horizon
Fill in the rental and your tax rates, then click Calculate.
Result
If you rent fewer days
| Days | Rent excluded | Total tax saved |
|---|
If the daily rate is cut back
| Scenario | Daily rent | Total tax saved | Net after yearly cost |
|---|
How it is calculated
Rent is days times the daily rate, up to 14 days. Federal saving is rent times your federal rate, times 80 percent if you turn on the qualified business income deduction (a deduction lowers the income that deduction is based on). For a sole proprietor, single-member LLC owner or general partner, self-employment tax saved is rent times 92.35 percent times the self-employment rate. An S corporation saves income tax only; a C corporation deducts at the corporate rate and you exclude the rent personally. State saving is rent times your state rate. Net saving is the total tax saved less your yearly cost, and the multi-year figure also subtracts the one-time setup cost.
Not modelled: whether your business purpose and days qualify, whether the daily rate is a fair market price, the deduction for half of self-employment tax, phase-outs and limits on the qualified business income deduction, state rules that differ from federal, whether the rent changes any other tax such as the net investment income tax, and audit risk. Unverified: checked by hand calculation and unit tests only. Confirm your facts and the current rules with a qualified tax professional.
Common questions
What is the Augusta rule?
Section 280A(g) of the Internal Revenue Code lets a homeowner rent a home for 14 days or fewer in a year without reporting the rent as income. When your own business is the renter and pays a fair market price, the business deducts the rent and you exclude it. It is named after Augusta, Georgia, where homeowners rent houses to visitors during the Masters golf tournament.
Can my business rent my home under the Augusta rule?
Often, yes, if the days have a real business purpose such as a board meeting, planning retreat or client event, the rent is a fair price, and the total is 14 days or fewer in the year. Whether your facts qualify is a question for a tax professional; this tool only prices the saving.
How is the saving calculated?
Rent is days times the daily rate. The federal saving is the rent times the tax rate you enter, reduced by 20 percent if you turn on the qualified business income deduction. Sole proprietors and general partners also save self-employment tax on 92.35 percent of the rent. State savings use the rate you enter.
What daily rate should I use?
A fair market rate for comparable space and use in your area, supported by written quotes or listings from nearby venues that hold similar meetings. An unsupported high rate is the usual reason the deduction is challenged, so the tool shows the saving at lower rates too.
What if I rent for more than 14 days?
Above 14 days the exclusion does not apply and the rent is taxable income, so this tool stops at 14. Count every day the home is rented to anyone, not only to your business.
What records should I keep?
A written rental agreement, the business purpose and attendees for each day, proof the business paid you, the days used, and the comparable rates behind your daily price.
Is my information uploaded anywhere?
No. Everything you type stays in this browser tab. There are no accounts, cookies or analytics vendors.