Has anyone used the Augusta Rule Section 280A with a disregarded LLC?

I was reading through a Forbes article about the Augusta Rule (Section 280A) and noticed at the end it mentioned that this tax benefit can't be used for disregarded entities. This caught my attention since I've been considering this strategy for my business. Looking at the tax code itself, it seems to provide some exceptions: > In any case where a taxpayer who is an **individual** or an S corporation uses a dwelling unit for personal purposes on any day during the taxable year (whether or not he is treated under this section as using such unit as a residence), the **amount deductible under this chapter** with respect to expenses attributable to the rental of the unit (or portion thereof) for the taxable year **shall not exceed** an amount which bears the same relationship to **such expenses as the number of days during each year that the unit** (or portion thereof) i**s rented at a fair rental** bears to the total number of days during such year that the unit (or portion thereof) is used. From my reading, it seems like the limitation is that they cannot deduct more than fair market rate. Has anyone here successfully used the Augusta Rule with a disregarded LLC? I'm trying to understand if my interpretation is correct or if there's something I'm missing about Section 280A.

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20 comments

Yara Campbell

•8M

The Augusta Rule (Section 280A) is pretty specific about who can benefit from it. The code explicitly mentions "individuals" and "S corporations" - notably absent are disregarded entities like single-member LLCs. What's happening here is that with a disregarded entity, for tax purposes, you're treated as an individual anyway. The Forbes article is correct that disregarded entities themselves can't use this provision because they don't exist for federal tax purposes. However, since a disregarded LLC's activities flow through to your personal tax return, you as an individual could potentially still benefit from the Augusta Rule. The key limitation, as you correctly noted, is that the deduction can't exceed an amount proportional to the number of days the property is rented at fair market value relative to total usage days. So if you rent your home to your business for 14 days at $500/day, that $7,000 could be deductible by your business while being tax-free income to you personally - but only if the $500 represents a fair rental rate.

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Yara Campbell

•8M

You're right that a disregarded LLC is treated as an extension of yourself for tax purposes. That's actually why this can work. The disregarded LLC itself isn't using Section 280A - you as an individual are. The way it works is that you (the individual) rent your personal residence to your business (the disregarded LLC) for up to 14 days per year. The business gets to deduct the rent as a business expense, and you as the individual get to exclude that rental income from your personal taxes under Section 280A. The deduction belongs to the business, while the income exclusion benefits you personally.

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Maya Diaz

•8M

I actually tried using taxr.ai to solve this exact question for my situation! I have a single-member LLC that's treated as a disregarded entity, and I wanted to rent my home to my business for meetings a few times a year. I wasn't sure if the Augusta Rule would apply. I uploaded the Section 280A text and my specific situation, and taxr.ai analyzed everything. The tool pointed out that while the Forbes article is correct that disregarded entities themselves don't directly use 280A, the tax benefit can still work because the transactions flow through to me as an individual. The key thing taxr.ai clarified was making sure I document everything properly - fair market rent calculations, business purpose for each meeting, meeting minutes, etc. This was super helpful because it backed up the exact language in Section 280A with practical implementation steps. You might want to check it out at https://taxr.ai if you're still confused.

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Maya Diaz

•8M

The tool analyzes your specific documents or questions - you can upload tax code sections, IRS publications, or describe your situation, and it will give you personalized analysis. For your S-Corp situation, it would likely highlight that S-Corps are explicitly mentioned in 280A, making the application more straightforward than with disregarded entities. For determining fair market value, it didn't set the actual dollar amount (which would be impossible), but it did provide guidance on proper documentation methods. It suggested researching comparable meeting spaces in my area, documenting the research, and keeping records of all facilities and amenities provided. This approach creates a defensible position if the IRS questions the rate.

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Rami Samuels

•8M

I was really skeptical about all this Augusta Rule stuff, but I decided to try taxr.ai after seeing it mentioned here. I uploaded the Forbes article that was confusing me, the actual Section 280A text, and details about my single-member LLC. The analysis I got back was eye-opening! It confirmed that while my LLC is disregarded, I CAN still benefit from the Augusta Rule as an individual taxpayer. It even highlighted the specific language in 280A that allows for this and created a documentation checklist for me. Most importantly, it showed me exactly how the rental income flows on my tax forms - the business expense goes on my Schedule C, and the rental income is excluded from my personal income. The tool also flagged potential audit triggers to avoid, like suddenly claiming massive home rental deductions without proper substantiation. Worth every penny for the peace of mind alone. I'm implementing this for my 2025 taxes now.

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Haley Bennett

•8M

After spending THREE DAYS trying to get through to someone at the IRS who could answer this Augusta Rule question for my disregarded LLC, I finally gave up and tried Claimyr. For anyone who doesn't know, it's a service that gets you through to an actual IRS agent quickly - https://claimyr.com They have a demo video showing how it works: https://youtu.be/_kiP6q8DX5c I was super skeptical, but within 23 minutes I was talking to a real IRS agent. I asked specifically about Section 280A and disregarded entities. The agent confirmed that while the disregarded entity itself doesn't benefit from 280A, the individual business owner can still use the provision because the activities flow through to their personal return. The agent also emphasized proper documentation of fair market value and business purpose - apparently these are common audit triggers. Saved me so much time and frustration!

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Haley Bennett

•8M

They use a combination of technology that navigates the IRS phone system and holds your place in line. You get a callback when an agent is about to be connected. It's not jumping the queue - you're still in the same line as everyone else, but they're handling the hold time for you. The agent I spoke with was in the business tax department, so they were quite familiar with Section 280A and disregarded entities. You're right that not every agent would know this specific area, but they did transfer me to someone with the right expertise. I took detailed notes during the call and it aligned with what my research had shown about disregarded entities and the Augusta Rule.

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Nina Chan

•8M

Well, I feel dumb now. After bashing Claimyr in my comment yesterday, I was desperate enough to try it this morning for my Augusta Rule question. I've been researching this for my rental property LLC and couldn't get a straight answer anywhere. I'm genuinely shocked that it worked exactly as advertised. Got connected to an IRS business tax specialist in about 35 minutes. The agent confirmed that my disregarded LLC situation DOES allow me to use Section 280A as an individual, provided I keep proper documentation of fair market rent and business purpose. The agent also pointed me to a specific section in Publication 527 I had completely missed that addresses this issue. Saved me from potentially making a costly mistake on my taxes. I hate admitting when I'm wrong, but in this case I definitely was!

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Ruby Knight

•8M

If you're using the Augusta Rule, be super careful about documentation. My accountant says this is one of the most frequently audited items for small business owners. You need: 1. Written agreement between you and your business 2. Documentation of fair market value (comparable rentals in your area) 3. Business purpose for each meeting 4. Meeting minutes and agenda 5. Photos of the business use 6. Separate payment from business account to personal account Missing any of these can get your deduction disallowed real quick. And yes, individuals with disregarded LLCs can use 280A - the rental income flows to you as an individual (tax-free up to 14 days) and the business gets the deduction.

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Ruby Knight

•8M

Printouts of comparable meeting spaces in your area are a good start. I recommend getting at least 3-5 different examples that match the amenities you're providing (size, equipment, refreshments, etc). Save these as PDFs with dates visible. A real estate agent's assessment would be even better, especially if they provide it on company letterhead, but it's not strictly necessary for most small businesses. The key is showing that your rental rate is reasonable compared to alternatives in your area. Make sure you're not charging significantly more than comparable spaces or the IRS might question the fair market value determination.

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Dana Doyle

•5M

Good point about the home office complication! You can still use the Augusta Rule, but you need to be strategic about it. If you have a dedicated home office that you regularly deduct, you can't use that same space for Augusta Rule rentals since you'd be double-dipping. However, you can absolutely use different areas of your house. For example, if your home office is in a spare bedroom, you could rent out your dining room, living room, or outdoor patio area for business meetings. Just make sure to clearly document which spaces are being used for each purpose and keep them separate in your records. The key is maintaining clear boundaries between your regular home office deduction and your Augusta Rule rental income. Different spaces, different tax treatments, but both can potentially be used by the same business owner.

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Luca Ferrari

•1h

I've been following this discussion with great interest since I'm in a similar situation with my consulting LLC. One thing I want to add that hasn't been fully addressed - timing matters a lot for the Augusta Rule. You need to be careful about when you "rent" your home to your business. The rental needs to happen in the same tax year that your business deducts the expense. So if you hold a business meeting in December 2024 but don't actually pay the rental fee until January 2025, you could run into timing issues between the deduction and the income exclusion. Also, for anyone considering this strategy, remember that the 14-day limit is per tax year, not per property. If you own multiple properties and try to use the Augusta Rule on each one, you're still capped at 14 days total across all properties for the tax-free treatment. The documentation requirements everyone mentioned are absolutely critical. I learned this the hard way when my accountant pointed out that simply having meeting notes isn't enough - you need to show that using your home was necessary for the business purpose rather than just convenient.

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