Deductible Motor Vehicle and Regional Transport Expenses Related to Rental Property

The use of your own private vehicle and other transportation may be deducted as expenses dependent on if they’re typical and needed. Various expenditures you may be able to write off are expenses such as traveling to receive rental payments as well as to perform maintenance on the rental premises. Commuting is not tax deductible. Additionally, you are unable to deduct the expenses of traveling to make improvements to your property. That’s typically recoverable under a cost recovery process such as depreciation.

Actual Expenses

Here you log all expenditures related to deductible travel in connection with the leased residence. IRS Publication 463, Chapter 5 specifies the way these expenditures must be reported and supported with invoices and receipts. Certain software applications can be purchased with iPod, Quick Books, Mint, and so on, which can help you keep track of these files; nevertheless, you still must have a touchable record to validate all write offs. You are required to report this with either Schedule C or Schedule E along with all necessary supporting documents. For people who have multiple rental properties, your business expenses must be allocated to each individual residence where the costs accrued. Do not include any non-business use or any other sort of vehicle use other than that which is in connection with the rental property.

Mileage Method

Here you may deduct your actual distance driven. For example, if you journeyed twelve hundred miles in the course of 2012, you’d implement the actual standard mileage rate of $0.55.5 per mile in line with present taxation rates and deduct your total.

Use of local transportation such as Zip Cars, metro bus companies, and car rental must have a principal connection to the real estate property and will include documents to back this. If employing public transit, it is advisable that you keep track of all fare expenses. It is also a good idea to keep a business account for rental cars and Zip Cars in order to show how the utilization is completely business relevant.

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

Federal Way 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.