In this episode of the Club Capital Leadership Podcast, host Bradley Hamner recasts a Club Capital webinar to explain the "Augusta Rule" (IRS Section 288G) and how insurance agency owners can use it to achieve tax‑free rental income. The rule, originating from homeowners in Augusta, Georgia who rented their homes to Masters tournament spectators, allows a personal residence to be rented for up to 14 days per year without reporting the income. The podcast walks through the rule’s definition, the specific entity types that qualify (S‑corp, C‑corp, partnership, or LLC taxed as one of those), and the requirement that the taxpayer be the owner or legal renter. It then details how an insurance agent can rent their home to their own agency for meetings, team events, or client gatherings, receive payment for up to 14 days, and keep that income off their taxable return while the agency claims a deductible expense. Practical guidance covers pricing the rental at market rates (using local listings or Airbnb), maintaining proper documentation, checking local short‑term‑rental regulations, and timing rentals during peak seasons to maximize the agency’s deduction and the individual’s payday. The episode also includes sponsor messages from Club Capital, Autopilot Recruiting, Coach Pay Consulting, and DirectClicks, and invites listeners to contact Club Capital’s tax team for personalized assistance.
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So the big question is this: how do small business owners like us grow our leadership, develop our teams, and scale our business in a way that allows us to get our products and services out to the world yet still remain profitable? That is the question, and this podcast will give you the answers. I'm Bradley Hamner, and this is the Club Capital Leadership Podcast. Hey, before we get into today's episode, did you know that Club Capital is the largest accounting and advisory firm for insurance agency owners in the country, providing monthly accounting, CFO services, and tax preparation. Check them out at club.capital. Welcome to another episode of the Club Capital Leadership Podcast. My name is Bradley Hamner, your host. On this episode, this is a recast of a webinar that Club Capital did on August 26th, 2022, and we talk about the Augusta Rule, its origin, its interpretation, and how it can help you as a small business owner to be able to take advantage of it. I wish it was the Augusta Rule, us talking about Augusta National. But without further ado, here's a webinar on the Augusta Rule. This podcast is brought to you by Autopilot Recruiting. Join over 1,200 State Farm agents in putting your recruiting on autopilot. Any successful insurance agent will tell you how important team is. Finding those rockstar team members doesn't happen when left to chance. It happens through consistent recruiting. You never know when you're going to lose a team member. And the key to an incredible team is constantly searching for the best talent. Autopilot Recruiting is a continuous recruiting service where you'll be assigned a recruiter that has been trained to recruit on your behalf every business day. This recruiter will take over and revamp your CareerPlug, send out assessments, do pre-screen phone interviews, and schedule your in-office interviews. All you need to do is to show up and give a thumbs up or a thumbs down. This ongoing service is extremely affordable. And a no-brainer for taking your insurance agency to the next level. Listeners of the Club Capital Leadership Podcast, go to autopilotrecruiting.com and use the code CLUBCAPITAL to get started. Again, autopilotrecruiting.com and use the code CLUBCAPITAL to get started.
All right, so let me just go ahead and, uh, and get everything started. So today we're going to be going over the Augusta rule. What is it and how can it help you maximize your tax benefits aka save money on taxes. Um, so without further ado, let's go ahead and get started. The Augusta Rule explained. So the agenda today looks like this. So number 1, why it's called the Augusta Rule, what's its definition, explaining the actual Augusta Rule, how does the Augusta Rule apply to me, aka an insurance agent, the IRS and the Augusta Rule, and of course top tips from our tax team. On using the Augusta Rule. So why is it called the Augusta Rule? Very straightforward. The Augusta Rule came into existence in the 1970s when residents of Augusta, Georgia wanted to rent their homes to the spectators of the annual master golf tournament and held at the— that is held at the prestigious Augusta National Golf Club. Essentially, they wanted to take advantage of this So people in that town realized that there's a section in the IRS tax code that actually allows them to rent their homes for up to— for less than 15 days out of the year and not have to report the rental income that they're receiving. So essentially, the code or the section in the IRS tax code that they found It's actually, uh, Section 288G of the, uh, once again the IRS, uh, tax code. And once again, it states that if a dwelling unit is used during the taxable, um, taxable year by the taxpayer as a residence— so again, very important, as a residence— and such dwelling unit is rented for less than 15 days during the taxable year, then the income derived from the taxable year shall not be included in the gross income. So once again, if it's your residence and you're renting this residence out for 14 days, so for 14 days or less out of the year, then you do not have to report this income in your gross taxable income. Uh, so essentially how I guess to elaborate on that once again, 14 days out of the year, you do not have to report. If it's rented for 14 days or less out of the year, then you do not have to report it to your gross income. On top of that, they do not have to be 14 consecutive days as long as it's just 14 days or less out of the year. And in regards to the type of property, it can be house, apartment, condo, mobile home, boat, or any similar property. And you do have to be the owner or renter of the property for you to take advantage of this. Uh, so for example, like, let's say that I was living at my— one of my mom's houses, if my mom had multiple homes, for example, and I was an, uh, an insurance agent I can't rent the house to my insurance agent agency despite me living there. I'm not a registered owner or renter. Like, if, if this was just like a situation in which she just let me have the house without any sort of contract or anything like that, I'm not the owner or renter of the house. Therefore, I could not take advantage of the Agosto rule. So once again, you have to be the registered owner or renter for you to actually be able to take advantage of the agosto rule. Uh, so moving on, how does it apply to you as an insurance agent? It's very simple. The fact that you're actually an agent allows you to take— to, to take advantage of double dipping because of the fact that you as the individual can rent your agency, uh, the house for up to 14 days for— to do multiple things, whether it's team bonding, whether it's you meeting with yourself, whether it's you meeting with clients, whether it's you throwing an event for marketing purposes. There are multiple things that you can do to rent the house to yourself. Um, so again, as an individual, you can receive payment from the agency for 14 days, you know, for the 14 days, and you will not have to actually report it in your gross taxable income. And as the agency owner, you get to take a tax deduction for the amount of money that you pay yourself, uh, AKA like that you pay yourself as the individual for being able to use the home for agency purposes. Once again, you can literally use it to meet with yourself, uh, just make sure that— just make sure that you properly document what exactly you're doing, uh, in the event that you ever question about the rental of this, uh, of these units yourself. Um, but essentially, once again, you can literally have meetings with yourself. So it's a really good way for you to take advantage, uh, of this tax loophole. Um, any questions about that, by the way? All righty, moving right along. Uh, so the IRS and the August rule. So of course there are like limitations to this rule. So number one, you cannot be a sole proprietor or an LLC taxed as a sole proprietor. Essentially, for you to take advantage of the August rule, you have to be either an S corporation, a C corporation, or a partnership. If you have an LLC Sorry, sorry, sorry. If you have an LLC, then it has to be taxed as one of these three. So once again, like, an LLC cannot be taxed as a sole proprietor and take advantage of the Agostini rule, and you cannot be a sole proprietor and take advantage of the Agostini rule. So once again, either LLC taxed as an S corp, C corp, or partnership, or just any of the three business entities that I just named. Of course, would definitely recommend One, just keeping record of what exactly took place during the time that you rented the agency your home. That way it's just easy in the event that you're questioned. The pricing has to be in line with your local listings. Let's say that you're paying, I don't know, $1,000 a month for rent or mortgage. You cannot rent yourself You couldn't charge the agency rent for $14K, aka $1,000 a day, because it's just not in line with what you would actually pay if you rented your neighbor's home for 14 days. So that's the logic that I would utilize. If I were to rent my neighbor's home, how much would I be willing to pay them? But going beyond that, you can simply look on Airbnb and just look at what units in your neighborhood are renting for on a daily basis. And that's what I would— like, that's what actually— but like, that's what I would go off of to make it easy for you. Of course, there are some counties and cities that do not allow short-term rentals, so definitely, you know, be sure to to just check with your local legislation or just reach out to our tax team, given that you have questions. And once again, it can only be for up to, uh, up to 14 days out of the year. If it's anything above that, you're gonna have to pay taxes on the, on the whole rental income that you receive. So up to 14 days out of the year, they do not have to be consecutive. So yeah. Our tips from the tax team. So one, we're familiar with the Augusta rule. So in the event that you are not a client, uh, of Club Capital, then definitely make sure that the person that you're dealing with, uh, is familiar with the Augusta rule. Two, once again, use, uh, applications like, um, like Airbnb and a few other ones like it. And I would say From a timing perspective, let's like use the applications so you can actually gauge like how much money you should be charging the agency to be able to use your home. But from a timing perspective, take a look at the peak seasons, and that's when we would recommend that you rent the, uh, the house to the agency, because at that point in time, that's when, that's when the agency can pay you, aka the individual, can pay you the highest amount of money, you know, in those 14 days that you're going to be renting your home. So the agency gets a big tax deduction, you get a big payday, and you will not have to report it, uh, in your taxes. So that's what we would recommend to you. Uh, overall, that is actually all for the Augusta rule. It's very, very straightforward. And once again, our tax team here is very familiar with it. So in the event that you do have any questions, definitely feel free to reach out and we're more than happy to assist you with this.
A big shout out to our podcast sponsors, obviously Club Capital, Coach Pay Consulting, Autopilot Recruiting, and DirectClicks. You wanna be able to get leads going into 2023 that your team can convert, go to directclicksinc.com. Speaking of team, you know, need to be recruiting on a regular consistent basis, but maybe you're just too busy, you have too many other things, I mean, hats you've got to be able to wear. Allow Autopilot Recruiting to be able to put quality candidates in front of you on a consistent basis so you can do what you do and be able to make a great decision. You know the power of having a bench, and then whenever you get them on your team, get those A players on your team, you need to be able to develop them on a consistent basis. That's where David Peterson and Coach P consulting comes in. When you go to Autopilot Recruiting, make sure you use the code Club Capital to get started and let David know that you heard about him on the Club Capital Leadership Podcast and you'll get your entire first month off. All right, everyone, till next episode, lead well. So the big question is this: how do small business owners like us grow our leadership, develop our teams, and scale our business in a way that allows allows us to get our products and services out to the world yet still remain profitable? That is the question, and this podcast will give you the answers. I'm Bradley Hamner, and this is the Club Capital Leadership Podcast. Hey, before we get into today's episode, did you know that Club Capital is the largest accounting advisory firm for insurance agency owners in the country, providing monthly accounting, CFO services, and tax preparation? Check them out at club.capital.
