Landlords Deduct Rental Property Travel Expenses

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Tax deduction overview

If you receive rental income from the rental of a dwelling unit, there are certain rental expenses you may deduct on your tax return.

When Are Travel Expenses Are Deductible?

For tax purposes, travel expenses are the amounts you spend when you travel away from your tax home overnight for your rental income activity. You don't have to travel any set distance to take a travel expense deduction. However, you can't take this deduction if you just spend the night in a motel across town.

Are travel expenses deductible for landlords?

If you own and/or manage rental properties that are outside of your local market, and you travel overnight for the purpose of managing, maintaining, or performing other tasks related to the properties, you may be able to deduct your reasonable expenses related to the trip. One key point before we go any further is that the IRS tends to take a closer look at deductions that have a lot of potential for abuse, and this is certainly one of them.

Alternatives - Local Travel Expenses

Calculating mileage the car travels:

The standard mileage rate is the simplest way to deduct local travel expenses because it requires the least amount of tracking. Simply take the number of miles you drove for business and multiply it by the standard mileage rate to get your deduction. The standard deduction for 2019 and 2020 is 58 cents per mile. You must travel outside your city limits. If you don't live in a city, you must go outside the general area where your tax home is located.

Regardless of the circumstances of your rental investment activity, you will likely be asked to record the following:

  • "the mileage for each investors use"
  • "the total mileage for the year"
  • the time (date will do), place (your destination), and purpose.

Permissible Reason

Investors usually don't do much driving to or from their rental properties or for other business purposes because (by definition) they are not actively involved in the management of their rental properties.

You should make a record of the reason and the mileage.
  • Such as property inspections
  • Such as show property dates
  • Such as repairs or overseeing repairs
  • Such as property improvements
  • Such as collecting rent payments
  • Such as posting door notices
  • Such as meetings with tenants for lease discussions
  • Such as meetings with tenants for deposit refunds
  • Such as meeting city officials, property managers, realtors
  • Such as court appearances

  • Keeping a mileage log

    The IRS tends to be strict in its documentation requirements for rental income mileage deductions. For this reason, you'll need to keep a thorough, accurate mileage log each year you attempt to claim a deduction. Your mileage log must include the starting mileage on your vehicle's odometer at the beginning of the year and its ending mileage at the conclusion of the year. Each time you use your vehicle for investment income purposes, you must record the following information:
    • The date of your trip
    • Your starting point
    • Your destination
    • The purpose of your trip
    • Your vehicle's starting mileage
    • Your vehicle's ending mileage
    • Tolls or other trip-related costs
    You can keep a mileage log in a notebook and update it by hand, or use a spreadsheet to continuously track your mileage.

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