How to Potentially Create a Tax Break by Renting Your Second Home
Key takeaways
- Review a summary of available Georgia homestead exemptions that may lower homeowner property taxes.
- Explore opportunities to earn tax-free rental income with your primary or secondary residence due to following the Augusta Rule, a national tax law that originated in Georgia.
- Evaluate tailored portfolio strategies that support your tax and retirement planning goals.
Introduction
Homeowners are often concerned with saving money on property taxes, and this usually applies to their main residence. Fortunately in Georgia there are multiple local and state homestead exemptions, a number of which specifically benefit seniors. There are some homeowners who enjoy more than one home, and since the state only allows the homestead exemption for your main residence, if you own a second home (not a full-time rental property, but a second residence), you may be searching for tax breaks for that. One particular law, the Augusta Rule, may provide people who own second homes some welcome tax relief.
Here we’ll discover what the Augusta Rule is, the origin of its name, and how it became a national law (IRS Section 280A). Then we’ll assess specifics on how you may qualify to claim the tax break so you can potentially maximize the rental income you receive before it impacts your Georgia retirement income.
Note: We’ll also review how you could potentially benefit from the Augusta Rule should you choose to rent your primary residence as well.
Recap of Primary Residence Homestead Exemptions & Senior-Friendly Property Tax Breaks
We’ve shared details in previous posts on how to take advantage of Georgia homestead exemptions. Primary residence homestead exemptions lower the taxable value of your home so your property taxes are reduced. If you’re a senior, it’s recommended to check your town, city, county, and the state for programs; they can differ depending on where you live.
The homestead exemption doesn’t apply to additional homes beyond your primary residence, but there are other ways to use a home to help lower your tax bill. A second home may provide an opportunity to help you lower your final income, so while that doesn’t impact your property tax, you may be able to save on your income tax if you follow the Augusta Rule.
Your Second Home: What Tax Breaks are Available?
People own second homes for various reasons; you might live in the country and also have a home near Atlanta. Or maybe it’s the other way around, and you live in the city and keep a second home in Savannah as a getaway. While it’s possible with a second home (and your first home, too), to get tax breaks, such as for installing energy-efficient equipment, you can also rent out your second home to boost your income. By following the Augusta Rule, you may be able to generate rental income that is excluded from federal gross income if the applicable requirements are satisfied.
The Augusta Rule: A Georgia Connection to the IRS Rule
In the 1970s Augusta-area homeowners, renting during the Masters1, pressed for relief from lawmakers because they believed local residents shouldn’t be forced to go through complicated tax reporting requirements for renting out their homes for less than two weeks a year.
Then Congress officially enacted Section 280A(g) of the Internal Revenue Code2. It helps homeowners nationwide so that an occasional residence rental would not be treated as a rental activity. Note: You do not need a sporting event, festival, or any major regional gathering to use the Augusta Rule. You may rent out your home (following the Augusta Rule requirements stated below) at any time of year.
How Does the Augusta Rule Work?
The key to the Augusta Rule is to rent your home for 14 days or less. Doing so means that you don’t have to report your rental income to the IRS3 for this timeframe. And since your federal adjusted gross income would not include that short-term rental income, it won’t get passed through to your Georgia income for state tax purposes under current conformity. You should consult your tax professional regarding the application of these rules to your situation.
Note: You may wish to get an overview of short-term rental laws and considerations from the Congress.gov website4.
Key points
- It’s up to you if you rent your primary residence for 14 days or your second home, or both. Each dwelling unit that you use personally as a residence is tested on its own. For example, ten rental days on your primary residence plus five rental days on a qualifying second home; those days are not added together. Check with the IRS for rules for rental income and expenses. You may wish to review Chapter 5 of this IRS document5.
- The 14-day or less rental income doesn’t get reported on Schedule E6 as regular rental income does.
- If you exceed the 14-day rental limit (say you rent one home for 20 days), you don’t get to benefit from the Augusta Rule for 14 of those days. The Augusta Rule does not apply at all if you rent for more than 14 days.
- The days do not have to be consecutive. Any day the home is rented (even for part of a day) counts.
- Because you do not have to report the Augusta Rule-specific income, you are legally barred from deducting any expenses associated with that rental. Mortgage interest and property taxes can still be claimed as personal itemized deductions if you otherwise qualify.
These home rental examples illustrate how you might approach using the Augusta Rule to gain tax-free income:
1) You enjoy living in the city and make Atlanta your home. Your second home in Savannah, which you also use as a residence (personal use has to exceed the greater of 14 days or 10% of the fair-rental days, so more than 14 personal-use days), is much sought after by vacationers, so you decided to rent it for a few days this summer. When you rent the Savannah house for 10 days at a fair price, that rental period is 14 days or less. Under the Augusta Rule for a dwelling unit used as a residence, the money you receive is generally excluded from your gross income by the IRS. You do not have to report it on your tax return, provided the applicable requirements are satisfied.
Note: A fair rental price is in line with local real estate listings and is determined by your property’s square footage, geographic location, and other features. You may wish to have the renter sign a rental agreement (not only to prove the ‘fair price’ but also as a standard part of the rental process), and it’s recommended that you save comparable rental listings for your area as supporting evidence for the price you set for your rental. A ‘fair price’ is good practice and matters for the residence test but is not an express condition of the §280A(g) exclusion itself.
2) Sometimes you may wish to rent out your primary residence and secondary residence. For example, you rent your primary residence for 14 days and your secondary home, which you also use as a residence, for 11 days. Because each is rented for 14 days or less, the Augusta Rule applies to both.
Ways to use the Augusta Rule: You may wish to focus on seasonal rental periods and target niche events, which other homeowners may miss, allowing you to rent against less competition. ExploreGeorgia.org (official website of the Georgia Department of Economic Development) offers this easy-to-search event list7 to help with your planning.
Key point: It’s recommended to check local ordinances for licensing laws, such as these pages from the cities of Atlanta8 and Savannah9. You may wish to check your responsibility to pay local hotel-motel taxes or state sales/use taxes on your rental income.
Note that since tax circumstances vary, consult your qualified tax professional regarding how the Augusta Rule may apply to your specific situation. The Moore’s Wealth Management team can work with you and your tax professionals when considering how tax planning relates to your broader financial and retirement planning strategy.
What If You Haven’t Yet Retired in Georgia or Want to Learn More About the Best Places to Live in the State?
Perhaps you need information about Georgia’s terrain and ideas on where you may wish to live in the state. We created a helpful post “Retiring in Georgia: 8 Top Cities You’ll Love” to provide a snapshot of the state’s varied geography. With that in hand, you can learn more about retiring to Georgia or, if you are already a resident, discovering sections of the state that might appeal to you for upsizing, downsizing, or purchasing a second home.
Your Year-End Tax Checklist
Reevaluate Your Portfolio
In addition to getting some potential non-taxable income from renting your home(s) for 14 days or less, it’s recommended to revisit your portfolio before tax season to explore approaches to saving on your tax bill.
Even the most well-planned portfolio can become obsolete or perhaps not operate the way you originally intended. This can happen due to life changes or external changes, such as some investments becoming not as advantageous as they were when you set them up. That’s why it’s important to consult your Moore’s Wealth Management advisor to determine if your portfolio could benefit from adjustments that better suit your life right now and any updated long-term goals.
Our recent posts can get you started. In this post about 2027’s Georgia retirement income exclusion increase, we presented several examples to show how the new exclusion amounts are treated under Georgia tax law. We also reviewed new state income tax reductions.
Receive Guidance Regarding Potential IRMAA Surcharges
You may be wondering how sales of personal property could affect your income for Social Security purposes. Learn more from our post “How to Manage IRMAA Medicare Premium Surcharges Through Strategic Tax Planning.” Find out how these charges may affect your Social Security and how to potentially reduce or avoid them.
Contact Moore’s Wealth Management for a Free Portfolio Review
Rental homes in Atlanta, Athens, Savannah, and other Georgia cities are in demand, and if you decide to rent out your home, you may be able to take advantage of the Augusta Rule. And as we mentioned, as a Georgia resident, there are homestead exemptions for homeowners under 60 and special exemptions (depending on where you live in the state) for senior homeowners. Add to this the opportunity to shield 14-day or less home rentals from taxation, and there are multiple ways to potentially save on your taxes as a Georgia homeowner.
Owning a home may be one facet of your financial profile. Moore’s Wealth Management team can also help you navigate retirement savings and taxation opportunities and challenges. We also can assist you with Social Security planning, estate planning, and more. Contact us today for a free portfolio review. No sales pitch or obligation; it’s an informative discussion tailored to your retirement and tax planning needs. Call Moore’s Wealth Management (770) 535-5000 or schedule your complimentary consultation online.
Resources:
1Taylor, Kelley R. “How to Earn Tax-Free Rental Income — Legally.” Kiplinger.com. December 11, 2023. Accessed October 3, 2026. https://www.kiplinger.com/taxes/how-to-earn-tax-free-rental-income-legally.
2Cornell Law School. LII–Legal Information Institute. Law.Cornell.edu. “26 U.S. Code § 280A – Disallowance of certain expenses in connection with business use of home, rental of vacation homes, etc.” n.d. Accessed October 3, 2026. https://www.law.cornell.edu/uscode/text/26/280A.
3Rowling, Sheryl. “5 Financial Freebies Every Investor Should Claim.” Morningstar.com. February 9, 2026. Accessed October 3, 2026.
https://www.morningstar.com/personal-finance/5-financial-freebies-every-investor-should-claim.
4“Short-Term Rental Markets: A Primer.” Congress.gov, Library of Congress, 3 October 2026, https://www.congress.gov/crs-product/IF12920.
5Internal Revenue Service. “Publication 527 (2025), Residential Rental Property
(Including Rental of Vacation Homes).” April 30, 2026. Accessed October 3, 2026. https://www.irs.gov/publications/p527.
6Internal Revenue Service. “Topic no. 415, Renting residential and vacation property.” September 24, 2026. Accessed October 3, 2026. https://www.irs.gov/taxtopics/tc415.
7Explore Georgia. “Calendar of Events.” ExploreGeorgia.org. n.d. Accessed October 3, 2026.
https://exploregeorgia.org/calendar-of-events?page=3.
8City of Atlanta, GA. “Short-Term Rental.” Atlantaga.gov. n.d. Accessed October 3, 2026.
9City of Savannah. “Short-term Vacation Rental Regulations.” Savannahga.gov. n.d. Accessed October 3, 2026.
https://www.savannahga.gov/2327/STVR-Regulations.
All information contained herein is derived from sources deemed to be reliable but cannot be guaranteed. This material is provided as a courtesy and for educational purposes only.
The views expressed herein are those of the author and do not necessarily reflect the views of Steward Partners or its affiliates. All opinions are subject to change without notice. Neither the information provided, nor any opinion expressed, constitutes a solicitation for the purchase or sale of any security.
Steward Partners, its affiliates, and its Financial Advisors do not offer tax or legal advice. The tax information contained herein is general and is not exhaustive by nature. Federal and state laws are complex and constantly changing. You should always consult your own legal or tax professional for information concerning your individual situation.
This article may contain links to articles or other information that may be on a third-party website. Steward Partners does not imply an affiliation, sponsorship, endorsement with/of the third party or that any monitoring is being done by Steward Partners of any information contained within the linked site; nor do we guarantee its accuracy or completeness. Steward Partners is not responsible for the information contained on the third-party website or the use of or inability to use such site.
