Deductible Automobile and Transportation Expenses Related to Rental Residences

The use of your own automobiles as well as rentals and local transport may be deducted based on a few particular variables provided these are common and important. If you are incurring travel expenses to maintain and manage your leasing residence, as well as to receive rent payments from residents, you will be allowed to deduct those travel expenditures. Commuting is considered a personal cost which is not deductible. You may not write off the expense of travel to your rental property to make improvements. A cost recovery system such as depreciation will typically take care of this.

Actual Expenses

Most of the expenditures regarding travel connected to owning rental property are reported with this approach. Those expenses need to be documented and backed up by invoices according to IRS Publication 463, Chapter 5. A few software apps are accessible by using iPod, Quick Books, Mint and so on; nevertheless, you still will need to keep a physical document to support any tax deductions. It’s vital that these records be documented, together with supporting documents connected, on the Schedule C or Schedule E. When you’ve got a few properties, your costs will be allotted to the residences where the costs incurred. You should not incorporate any kind of non-business use or any other use except that specifically pertaining to the property.

Mileage Method

You may deduct your actual mileage traveled. For example, if you traveled twelve hundred miles in 2012, you’d calculate costs with the present standard mileage rate of $0.55.5 per mile based on present tax rates and deduct the total.

Working with community transport such as Zip Cars, metro bus companies, and automobile rentals will need to have an immediate connection to the real-estate and must include paperwork to support this. In order to show all public transportation use is completely business connected, it is suggested you keep fare cards. It is also a good idea to keep track of Zip Car and rental car use and allocate those costs to company accounts.

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

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.

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