Tax Deductible Motor Vehicle and Transportation Business Expenses for Landlords

The special utilization of your personal motor vehicle as well as other cars will be allowed as an expense dependent on a few factors if ordinary and necessary. If you are using your vehicle to maintain, and coordinate a leased premises, as well as to collect money from occupants, you will be able to deduct all of these expenditures. Driving to and from work is seen as a private cost so is not allowed for deduction. Additionally, you are unable to write off costs of travel to improve the residences. A cost recovery system such as depreciation will take care of this.

Actual Expenses

With this option you are going to report all  the different expenses regarding traveling out of the home connected with the leasing residence. IRS Publication 463, Chapter 5 identifies the way the expenses must be documented and supported with invoices and receipts. A number of software program apps can be purchased by iPod, Quick Books, Mint, among others that will help you back up your files; however, you still must have a touchable document to validate the deductions. It’s essential that these records be reported, together with corroborating forms, in your Schedule C or Schedule E. The expenditures should be allocated to each property where the costs were accrued when you have more than one rental property. Only use of vehicles specifically in connection with your rental properties are deductible, do not include personal travel expenses in your deductions.

Mileage Method

According to this process, you will deduct your actual mileage driven. You would utilize the current standard mileage taxation rate of $0.55.5 per mile.

Use of local transportation such as Zip Cars, Metro bus services, and auto renting will need to have a principal relationship to the premises and should include records to support it. It is a good idea with to allocate all these charges to a business account associated directly with your rental property business.

  • You can obtain the different documents outlined in this information on the IRS’s webpage. Refer to IRS Publication 527 for additional information.

Kent 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.