The 14-day rule, also known as the Augusta rule or master's exemption, is a US Internal Revenue Service provision that allows homeowners to rent out a personal residence for 14 days or fewer in a calendar year without owing federal income tax on the rental income or reporting it. To qualify, the property must be used as a residence and rented for no more than 14 days total during the year. Because the income is excluded, the host generally cannot deduct rental-related expenses for those days, though itemized deductions like mortgage interest and property taxes may still apply under the usual rules. The rule earned its Augusta nickname from homeowners near the Augusta National Golf Club who rent their homes during a major tournament. Local occupancy or lodging taxes may still apply even when the income is federally tax-free, and hosts should consult a tax professional to confirm eligibility.
Why this matters for property managers
This rule offers a legitimate way to earn untaxed income from occasional rentals, valuable for owners near high-demand events. Crossing the 14-night threshold changes the tax treatment entirely: all income becomes reportable, which opens deductions but also imposes strict record-keeping. Counting rental days precisely is what keeps the exemption valid.
Frequently Asked Questions
How many days can I rent tax-free under the 14-day rule?
Can I deduct expenses for the days I rent under this rule?
What happens if I rent for 15 days or more?
Do local taxes still apply under the 14-day rule?
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