Tax Deductible Automobile and Local Travel Expenses for Property Owners

Ordinary and necessary travel expenses pertaining to your rental property may be deductible. Travel to perform maintenance or managerial duties or to collect rent from your tenants are all deductible costs. Commuting is considered a personal expense and is not deductible. Travel to make improvements on a property are not deductible, and are generally recoverable under a cost recovery process such as depreciation.

Actual Expenses

Here all deductible travel costs connected to your rental property are reported. IRS Publication 463, Chapter 5 explains what is needed to keep a record of your expenses. A number of software applications can be obtained from iPod, Quick Books, Mint, and more which will help you back up your files; however, you must continue to keep a physical report to back up any write offs. You are required to claim this either with your Schedule C or Schedule E. The costs must be allotted to each property where the expenses are incurred if you have more than one rental property. Remember all deductions must be business related.

Mileage Method

This method allows you to write off all miles traveled that tax year. For example, if you traveled 1200 miles in 2012, you would utilize the latest standard mileage rate of $0.55.5 per mile.

Travel with local transport including Zip Cars, metro bus services, and motor vehicle rental it is a good idea to keep records of your expenses. It is also a good idea to place all of these charges on a business account tied directly to your rental property business.

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

Lynnwood 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.