Motor and Local Area Travel Business Expenses that Are Tax Deductible for Rental Property Owners

The use of your own personal transportation as well as other forms of local transportation are deductible travel expenses when they are considered ordinary and necessary. If you travel to maintain and/or operate any rental residence or even obtain rental payments from occupants, you may be able to write off these kind of costs. Given that commuting is a private expense, it is not allowed for deduction. Likewise, you are unable to write off the expenses of commuting from your personal property to make improvements on a premises. A cost recovery process such as depreciation will ordinarily take care of this.

Actual Expenses

With this solution, you will document all expenses in association with the leased residence. IRS Publication 463, Chapter 5 identifies the way these expenditures have to be recorded and backed up with receipts. You need to have a physical report to support your deductions, but there are software program applications attainable via iPod, Quick Books, Mint, and others. You are required to report these deductions on either a Schedule C or Schedule E. For people with different rental properties, your business expenses should be allotted to the individual premises in which the expenses were incurred. Do not add in any personal travel costs to your deductions.

Mileage Method

Here you can write off the cost of your actual distance traveled. For example, if you drove 1200 miles throughout the year 2012, you would apply the present standard mileage rate of $0.55.5 per mile according to present tax rates.

Use of local transport including Zip Cars, metro bus, and vehicle rentals will need to have a direct connection to the real-estate and you must include documentation to support this. To demonstrate that your public transit use is solely business associated, it is encouraged that you maintain thorough records and tie all costs to a business account directly linked to your rental property business.

• You can obtain the different documents outlined in this information on the IRS’s webpage. Consult IRS Publication 527 for additional information.

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.