Automobile and Travel Expenses which Are Deductible for Rental Property Owners and Landlords

When travel expenses are necessary and ordinary, they may be deductible. If you are using your vehicle for maintenance tasks and management of your rental property and/or to receive rent from your occupants, these are all deductible expenses. Note that commuting is a personal cost and is not deductible. Moreover, you may not deduct travel expenses incurred to to make improvements on a rental property. A cost recovery process just like depreciation will take care of this.

Actual Expenses

All travel expenses related to your property may be deducted this way. IRS Publication 463, Chapter 5 identifies just how those costs must be documented and supported with invoices. Certain software apps can be obtained by using iPod, Quick Books, Mint, and more to help back up your files; nevertheless, it is necessary to have paper records to validate any write offs. You will use a Schedule C or Schedule E to report expenses. If you’ve got more than one property, your expenditures should be allocated to the premises where the expenses incurred. Only vehicle use involving rental properties is permitted.

Mileage Method

Here you deduct just your actual mileage driven. For instance, if you traveled 1200 miles throughout 2012, you would utilize the latest standard mileage rate of $0.55.5 per mile in line with present tax rates.

Usage of Zip Cars, metro bus lines, and automobile rentals should have a principal relationship to the property and should include paperwork to back this. In order to show how the public transportation use is entirely business connected, it is encouraged that you allocate costs to a business account related to your property.

Quick Note: You can obtain the different documents outlined in this information on the IRS’s webpage. Refer to IRS Publication 527 to find out more.

Woodinville CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. He is a graduate of Washington State University and the University of Washington School of Law.

  • Huddleston Tax Accountants / Huddleston Tax CPAs – Kirkland
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