Allowable Automobile and Local Travel Expenses Related to Owning Rental Property

The specialized use of your personal motor vehicle and other forms of local travel can be deducted as an expense depending on a number of criteria and provided these costs are normal and needed to run your rental property business. Certain expenditures you will be allowed to deduct include costs of using your motor vehicles to obtain revenue from tenants and traveling to provide maintenance to your property. Given that commuting to work is really a private cost, this is not permitted for deduction. Any type of expenses incurred by traveling from your personal property to your rental property for improvements are not deductible. This is commonly recovered under a cost recovery system such as depreciation.

Actual Expenses

Using this approach you will document the different costs pertaining to travel out of the home connected with the leased premises. Each of these business expenses must be recorded and backed up with receipts in keeping with IRS Publication 463, Chapter 5. You need to have a touchable record to back up any deductions. There are software program applications offered with iPod, Quick Books, or Mint, as well as others. It is essential this data be reported, with supporting documents connected, on either a Schedule C or Schedule E. For people with multiple rental properties, your expenses must be allotted to each individual property where the expenses are accrued. Make sure not to add in any sort of non-business use or other use except those specifically associated with the rental property.

Mileage Method

According to this process, you  deduct your actual miles driven. For example, if you drove twelve hundred miles during 2012, you would implement the present standard mileage tax rate of $0.55.5 per mile.

Working with neighborhood transport including Zip Cars, metro bus services, and motor vehicle rentals, your travel costs must have a direct connection to the real-estate. You will need documents to back this. When using public transit, it is advisable that you obtain a separate ticket card and company account for car rentals and Zip Cars showing that this use is entirely business associated.

Quick Note: You can obtain the different documents suggested in this information on the IRS’s webpage. To find out more, please check with 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.

Seattle CPAsAbout Seattle CPAs
Seattle CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. Since 2002, he has been the owner of his own small business, Huddleston Tax CPAs. He is a graduate of Washington State University and the University of Washington School of Law.

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