Rental Property Vehicle and Local Transportation Expenses which Are Deductible for Landlords

If your specialized travel costs of your personal automobile or another form of transportation are normal, needed, and reach a few particular factors, they may be deducted. Should you use your personal motor vehicle to maintain and manage your rental premises, or even secure rental money from inhabitants, you’ll probably be able to write these expenses. Since commuting is seen as a private expense, this is not permitted for tax deduction. Besides that, you won’t deduct the expenses of travel to make improvements to residences. That’s commonly recovered under a cost recovery system such as depreciation.

Actual Expenses

The expenses which are related to having to travel away from home in association with the leased property will be reported with this method. IRS Publication 463, Chapter 5 stipulates exactly how these kinds of expenses should be reported and supported with receipts. A number of software program applications are available from iPod, Quick Books, Mint, as well as others to help back up your files; however, you will need to still have a tangible document to validate all deductions. It’s essential that these records be documented, along with supporting forms attached, on either a Schedule C or Schedule E. All expenses must be allotted to the individual residences where the expenses incurred, if you own more than one rental property. Only vehicle use involving the rental property is tax deductible, so please remember not to add in any sort of private or any other costs that aren’t associated with your rental properties on the documents.

Mileage Method

According to this process you write off the cost of your actual mileage driven. You’d use today’s standard mileage tax rate of $0.55.5 per mile.

You have to have proof to support the cost of local travel such as vehicle rentals, metro bus service, and Zip Cars that you declare are specifically related to the real estate property. To demonstrate the fact that public transit use is exclusively business associated, it is suggested that keep documentation of all travel costs and allocate these costs to a business account tied directly to your rental property business.

For additional information please 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.