Leased Property Motor and Local Travel Business Expenses which Are Deductible

If the special travel costs of your own personal automobiles or another local transportation cost are typical, needed, and meet certain criteria, then they can be considered deductible. If you use your personal vehicle to take care of, and operate your rental residence, as well as to collect money from residents, you may write off all of these costs. Note that driving to and from work is considered a personal cost and is not tax deductible. You may not deduct the cost of commuting to your rental residence to make improvements to the property, either. A cost recovery system like depreciation will typically cover that.

Actual Expenses

Many of the costs pertaining to having to travel from home in connection with the rental residences will be reported in this approach. IRS Publication 463, Chapter 5 stipulates precisely how these costs need to be reported and backed up with invoices and receipts. Some software applications can be obtained with iPod, Quick Books, Mint, and others, but you will need to continue to keep a real report to backup your deductions. You have to report this either in your Schedule C or Schedule E together with important forms connected to those. If you’ve got a number of properties, your business expenses must be allotted to the residences in which the expenses were accrued. Only use specifically connected with your rental properties is permissible to write off, so do not include any sort of personal or other kinds of non-property related expenses on these documents.

Mileage Method

Another approach, under which you may write off the actual mileage traveled. As an example, if you drove 1200 miles throughout the year 2012, you could use the present standard mileage rate of $0.55.5 per mile based on existing taxation rates to deduct the total cost incurred.

You’ll need records to back up all use of local transport including auto rentals, metro bus service, and Zip Cars. Of course, all must have been used for transportation directly linked to the property. If using with public transport, it is advisable that you maintain travel stubs. It is a good idea to maintain a separate company account for rental cars and Zip Cars to demonstrate how the use is solely business associated.

  • You can obtain the different documents mentioned in this information on the IRS’s webpage. To learn more please check with IRS Publication 527.

Bellevue 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.

  • Huddleston Tax CPAs / Huddleston Tax CPAs – Bellevue CPAs
    Certified Public Accountants Focused on Small Business
    40 Lake Bellevue Suite 100 / Bellevue, WA 98005
    (425) 273-6512

    Huddleston Tax CPAs & accountants provide tax preparation, tax planning, business coaching,
    QuickBooks consulting, bookkeeping, payroll, offer in compromise debt relief, and business valuation services for small business.

    We serve: Tukwila, SeaTac, Renton. We have a few meeting locations. Call to meet John C. Huddleston, J.D., LL.M., CPA, Lance Hulbert, CPA, Grace Lee-Choi, CPA, Jennifer Zhou, CPA, or Jessica Chisholm, CPA. Member WSCPA.