Tax planning tends to fall into the background during a busy year in a dental practice. Patient schedules fill quickly, staffing decisions demand attention, and most financial conversations get pushed to filing season. Still, some of the most useful planning opportunities happen well before a return is prepared, especially for practice owners with higher income and more complex structures.
One area that often comes up during planning discussions is the use of a dentist’s home for business purposes. Many practice owners are aware that there is a narrow exception in the tax code that allows a personal residence to be rented to a business for a limited number of days without creating taxable income. What is less clear is whether that exception still holds in 2026, and how cautious dentists need to be when applying it in today’s enforcement environment.
This is known as the Augusta Rule. This article explains how the Augusta rule for dentists is applied, and what needs to be in place for it to remain a defensible strategy in 2026.
What Is The Augusta Rule?
The Augusta Rule allows homeowners to rent out their personal residence for up to 14 days per year without reporting the rental income on their tax return.
Originally, the rule was associated with homeowners in Augusta, Georgia, who rented their homes during major sporting events. Over time, business owners began using it as a planning tool by renting their homes to their own businesses for legitimate meetings or events.
For dentists who own their practice through a separate business entity, this creates an opportunity to shift income in a tax-efficient way, as long as the arrangement reflects a real business purpose and follows IRS guidelines.
Why The Augusta Rule Can Matter For Dentists
Dentists are often strong candidates for this strategy because many practice owners operate through S corporations or other formal entities. They also occasionally hold meetings that go beyond day-to-day patient care.
Practice planning sessions, annual reviews, team strategy meetings or training days can all qualify when they are properly structured and documented. When your dental practice rents your home for these meetings, the practice may deduct the rental expense, while you personally receive the rental income tax-free.
In 2026, this remains a useful tool for dentists who are already doing thoughtful tax planning and want to reduce taxable income without taking on unnecessary risk.
Who Is Eligible To Use The Augusta Rule?
Eligibility depends on both the property and the business entity involved.
Your home must be a personal residence, which can be a primary or secondary home. It should not be treated as a regular rental property.
Your dental practice must be a separate legal entity, such as an S corporation, C corporation, or partnership. Renting your home to a sole proprietorship or a disregarded entity is generally not effective, since there is no true separation between you and the business.
Most importantly, the rental must serve a clear business purpose. The IRS expects to see legitimate meetings that would otherwise require renting space elsewhere.
The Core Rules Dentists Must Follow
The Augusta Rule is straightforward, but it is not flexible. There are several rules that must be followed closely.
First, the 14-day limit is absolute. You may not exceed 14 rental days in a calendar year. If you do, the entire rental arrangement becomes taxable, not just the extra days.
Second, the rent charged must reflect fair market value. This means your dental practice should pay what it would reasonably cost to rent a comparable meeting space in your area. Inflated rates are a common reason these arrangements are challenged.
Third, documentation matters. You should have a written rental agreement, meeting agendas, records of attendance, invoices, and proof of payment. These details demonstrate that the arrangement is real and business-driven.
How Dentists Can Use The Augusta Rule In Practice
Start by identifying meetings that truly belong outside the office. Annual planning sessions, leadership meetings, or training days often make sense.
Next, determine a reasonable rental rate by looking at local conference rooms, hotel meeting spaces, or coworking venues. Keep records of how you arrived at the rate.
Create a simple rental agreement between you and your dental practice that outlines the date, purpose, and rental terms. After the meeting, issue an invoice and ensure the practice pays you promptly.
Finally, keep all supporting documents together. Good organization is what turns this from a risky idea into a defensible strategy.
Common Questions Dentists Ask
Many dentists ask whether meals can be included. The rental deduction applies to the use of the space itself. Meals and other costs are subject to separate rules and should be tracked independently.
Another common question involves home office deductions. Mixing home office deductions and Augusta Rule use in the same space requires careful planning. This is an area where coordination with your CPA is important.
Dentists also worry about accidentally exceeding the 14 day limit. Tracking usage carefully throughout the year helps avoid unpleasant surprises.
Mistakes That Create Problems
The most common mistakes are charging excessive rent, failing to document meetings, and using the home for events that are primarily social rather than business-focused.
The Augusta Rule is not meant to justify casual gatherings or family events. When the business purpose is weak, the tax benefit is as well.
Planning Ahead With Virjee Consulting
Not every dentist needs this strategy. It tends to work best for practice owners with consistent profits, formal business entities, and a broader tax planning approach already in place.
With the right structure, fair pricing, and solid documentation, it can be a practical way to reduce taxes without adding complexity. If your practice is small, newly established, or still finding its footing, simpler strategies may offer more value with less effort.
At Virjee Consulting, we help dentists understand which strategies make sense for their practice and how to implement them properly. If you are wondering whether the Augusta Rule fits into your 2026 tax plan, a conversation now can help you move forward with confidence.
Reach out to schedule a discussion and take the guesswork out of tax planning for your dental practice.
