Local Area Transportation Business Expenses that Are Deductible for Rental Property Owners

If your travel costs related to your rental property business are considered ordinary and necessary they may be deductible. Certain expenses you’ll be able to deduct under this terminology would be costs related to travel to perform maintenance or managerial duties and collect rental payments from tenants. Since commuting is regarded as a private expense, it isn’t authorized for tax deduction. Additionally, you are unable to write off costs of traveling to make improvements to a rental premises. This is ordinarily reclaimed using a cost recovery process such as depreciation.

Actual Expenses

Most of your travel expenses available for deduction will be deducted with this method. You should back up all of your expenses according to the guidelines stipulated in IRS Publication 463, Chapter 5. A few software program apps are offered through iPod, Quick Books, Mint, and others that can assist in backing up your documents with e-files; however, you will need to maintain concrete reports to support all deductions. You will need to report your documents on either a Schedule C or Schedule E along with any corroborating forms. For people with a number of rental properties, your business expenses need to be allocated to the individual residences where the expenses incurred. Do not incorporate personal travel expenses in with your business travel expenses.

Mileage Method

Under this method you may deduct your actual mileage driven. For example, if you drove 1200 miles in the course of the year 2012, you’ll use the current standard mileage rate of $0.55.5 per mile based on current taxation rates.

You will need proof to back up use of area travel such as vehicle rental, metro bus service, and Zip Cars you claim are exclusively linked to the properties. If employing public transportation, it is suggested that you maintain thorough records and tie all costs to a company account directly related to your rental property business.

• You can obtain the different documents outlined in this information on the IRS’s webpage. To find out more be sure to consult IRS Publication 527.

Seattle 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.