Deductible Motor and Transport Business Expenses from Rental Premises

When the specific transportation costs of your own private vehicles or another automobile are considered ordinary, necessary, and meet a number of other criteria, they can be allowed for deduction. Various expenditures you may be allowed to deduct are the expenses of driving an automobile to receive rental payments and also to help maintain the state of your property’s premises. Given that commuting to work is seen as a private expense, it is not permitted for deduction. Also, you can’t deduct the cost of traveling from your personal property or elsewhere to make improvements to your rental property. A cost recovery process like depreciation will usually cover such costs.

Actual Expenses

With this solution, you will report expenses pertaining to your travel away from home connected with the leasing residence. IRS Publication 463, Chapter 5 stipulates the way all these business expenses must be recorded and supported are with invoices and receipts. A few software apps can be found from iPod, Quick Books, Mint, as well as others which will help you record this information; nevertheless, you still must have a real document to back up the write offs. You have to report these costs either on a Schedule C or Schedule E along with all subsequent supporting forms. Your expenses need to be allotted to each residence where costs were incurred, if you own more than one property. Remember not to include personal use costs or any other sort of travel costs apart from those connected with the property.

Mileage Method

Here you will deduct your actual mileage driven. As an example, if you drove twelve hundred miles in 2012, you would use the latest standard mileage tax rate of $0.55.5 per mile and deduct the total.

You should have records to help support costs of local transportation such as motor vehicle rental, metro bus service, and Zip Cars which may only be declared when these costs are directly associated with the real-estate you own. In order to show your public transit use is entirely business linked, it is strongly suggested that you keep your different fare cards and tickets. To show these costs are directly related to business, it is also a good idea to allocate Zip Cars and car rental costs to business accounts.

Quick Note: You can obtain the different documents outlined in this information on the IRS’s webpage. For additional information on rental property ownership, be sure to consult 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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