Automobile and Local Transportation Expenses that Are Tax Deductible for Rental Residence Owners

Travel with your own private car as well as other forms of local transportation are often deductible if they’re considered ordinary and required. If you use your own personal vehicles to maintain and manage a leasing property, and also to secure income from occupants, you might be allowed to deduct these kinds of costs. Please be aware driving to and from work is seen as a personal expense which is not allowed. Also, you can’t write off travel costs undertaken in order to provide improvements on a property. A cost recovery process like depreciation will normally deal with that.

Actual Expenses

Here you may deduct all expenses associated with your rental property. IRS Publication 463, Chapter 5 describes how all of these costs will have to be reported and supported with receipts. Certain software applications can be bought via iPod, Quick Books, Mint, and more which will help you keep track of your files; nevertheless, you will still need to maintain a touchable report to backup your write offs. It is required these details be reported, along with supporting documents attached, on either a Schedule C or Schedule E. For people with two or more rental properties, your expenditures must be allotted to the residence in which the expenses accrued. Remember to not incorporate any kind of personal use or any other type of use except that specifically associated with the rental property.

Mileage Method

All miles traveled during the course of the year are deductible. For example, if you traveled 1200 miles during 2012, you would use the present standard mileage rate of $0.55.5 per mile based on existing tax rates to deduct the total.

You need paperwork to support all deductions regarding area transportation like motor vehicle rentals, metro bus companies, and Zip Cars exclusively connected to the real estate property. If employing public transit, it is strongly suggested that you maintain records of usage. If using Zip Cars or rental cars, place these costs in a business account tied directly to your rental properties.

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

Tacoma 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.