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How to (Legally) Deduct Rental Property Travel Expenses

Tax law in the U.S. can be extremely friendly to real estate investors. Rental property owners can deduct normal operating expenses, and use depreciation to reduce taxable net income. Another benefit of owning rental real estate is deducting travel expenses.

However, there’s a right way and a wrong way to claim travel expenses on your tax return. In this article, we’ll explain how rental property travel expenses work, along with some of the most common travel expense deductions for real estate investors. After all, tax deductions are often seen as one of the biggest benefits of owning real estate.

Note: this is not tax advice and we recommend you speak with your CPA to understand your specific situation.

Can Landlords Deduct Travel Expenses?

Landlords can deduct travel expenses when traveling to visit a remote real estate investment in another market and for going to a property you own locally. 

However, the IRS knows that travel expenses are one of the most abused deductions for business people, so it’s important to play by the rules before claiming a deduction for rental property travel expenses.

IRS and Travel Expense Deductions

According to IRS Publication 527 , Residential Rental Property:

“You can deduct the ordinary and necessary expenses of traveling away from home if the primary purpose of the trip is to collect rental income or to manage, conserve, or maintain your rental property. You must properly allocate your expenses between rental and nonrental activities. You can’t deduct the cost of traveling away from home if the primary purpose of the trip is to improve the property. The cost of improvements is recovered by taking depreciation.”

The IRS also provides additional guidance for travel expense deductions in Publication 463 .

Travel Expense Rules of Thumb

If you’re ever in doubt about whether a specific travel expense is deductible, it’s always a good idea to get professional advice from your accountant or CPA. With that in mind, here are some rules of thumb to follow to help understand if an expense incurred when traveling can be deducted on your tax return:

• Purpose of travel must be mainly for business and have a clear business purpose.
• Majority of the travel time must be spent on your rental business rather than leisure.
• Travel expenses must be “ordinary and necessary” for your real estate business but not overdone, such as staying in a 5-star resort versus an Airbnb or VRBO when going out of town.
• Rental activity like showing the property to prospective tenants or doing an inspection is also a deductible travel expense, provided that was the main reason for traveling.
• Traveling to conduct repairs and maintenance is deductible, but traveling to the property to make a capital improvement such as replacing the HVAC or installing a new roof is not a deductible expense.

Common Rental Property Travel Expense Deductions

Your travel expenses and the reason for taking a trip must have a logical connection to your rental property business. 

A good way to decide whether or not a travel expense is legitimate is to use common sense. For example, if your wife or partner says something along the lines of, “Wow, I didn’t know this was deductible!” you may want to think twice before claiming the travel expense.

Now, let’s take a look at some of the common rental property travel expense deductions real estate investors can claim:

• Expenses traveling to and from the airport, such as a taxi or Uber.
• Airfare, train, or bus fare.
• Car rental expenses and associated costs such as parking fees or tolls.
• Travel to a Home Depot or Lowes to shop for materials and supplies to be used for your rental property.
• Traveling to the property to show it to prospective tenants.
• Travel expenses incurred to interview or meet with members of your local real estate team, such as an accountant, attorney, leasing agent, property manager, lender, or general contractor.
• Costs of traveling to an event or meeting for continuing education purposes, such as a seminar, trade show, or convention.
• Shipping costs for luggage or items required for your rental property business.
• Lodging expenses and 50% of meal and beverage expenses incurred while you are traveling outside of your home market.
• Tips paid for service in conjunction with travel to your rental property.
• Miscellaneous expenses such as laundry and dry cleaning, groceries, computer rental fees, or internet charges.

Travel Expenses to a New Rental Market

A recent post on the Stessa blog explains how travel expenses are treated differently when going to a new market to investigate potential rental property to invest in. 

For example, let’s say you’ve been researching the Austin real estate market on the internet and know it’s one of the best cities to invest in real estate this year. 

If you travel to Austin, incur $2,000 in travel expenses, and eventually buy your first rental property in the market, those travel expenses are not immediately deductible. Instead, they must be capitalized by adding them to your property basis and depreciated over 27.5 years rather than being expensed the year they are incurred. 

Now, assume your first rental property in Austin performs beyond your wildest expectations and you want to buy another. This time your travel expenses can be fully deducted (instead of capitalized) because you already own a property in the market, assuming the travel expenses are ordinary and necessary for your rental property business in the market.

So what happens if you travel to a different city to research potential rental properties, but decide not to invest? 

In a situation like this, the travel costs are considered a business start-up expense and can only be deducted after you buy your first rental property in that market. If you’re a remote real estate investor, it may be a good idea to research as much as possible online. Then, wait to travel to the market once you have a property under contract and the home has passed its preliminary inspections.  

How Auto Deductions Work

Real estate investors who own rental property in their home market can claim the auto expense deduction provided by the IRS. 

As a side note, your home market – also known as your “tax home” – is your regular place of business. For most real estate investors, the home market is also the city that they live in. Even if you own rental property remotely, or in an area of the country outside of your home market, you still do the majority of your work on your rental property business from your home office.

There are two ways rental property owners can claim an auto expense deduction:

Standard Mileage Deduction

The standard mileage deduction is the easiest way to claim an auto deduction when traveling to a rental property in your own market. To calculate the mileage deduction, simply keep track of your miles driven for your rental property business and multiply by the standard mileage rate. 

The standard mileage rate issued by the IRS for 2021 for a car, van, pickup, or panel truck is 56 cents per mile. For example, if you drove a total of 500 miles this month for rental property-related purposes, the standard mileage deduction would be $280 (500 miles x 56 cents).

Actual Expense Deduction

The second way that rental property investors can claim an auto expense is by keeping track of all auto expenses and business-related miles, then claiming proportional share used for business as the actual auto expense deduction.

For example, assume your auto expenses – items such as car payments, gas and oil, insurance, repairs and maintenance, car washes, registration and license fees, and tolls and parking costs – were $975 this month. If you drove a total of 2,100 miles and 500 of those miles were related to your rental property business, your actual auto expense deduction would be $232:

• $975 total auto expenses / 2,100 total miles driven = 46.4 cents per mile
• 500 miles related to rental property business x 46.4 cents = $232

Keeping Track of Your Miles

Both the standard mileage deduction method and the actual expense deduction method require you to keep track of the miles driven for your rental property business:

• Odometer reading at the beginning of the period (usually the month or year).
• Odometer reading at the end of the period.
• For each business trip, the date and purpose of each trip, the number of miles driven, and the location of the tip.

How to Track Rental Property Travel Expenses

You can keep track of your mileage using a logbook or digitally. Smartphone apps for tracking mileage include MileIQ , SherpaShare , and TripLog .

If you’re using the actual expense deduction you’ll also need to keep track of your auto expenses. 

One of the easiest ways to do this is with Stessa’s mobile app . Each time you incur an auto expense, scan the receipt or invoice. Stessa’s machine learning and OCR technologies will parse all of the details and automatically organize the information for you.

Mixing Business with Pleasure

Sometimes it’s possible to mix personal and business travel provided that you do it strategically. Generally speaking, as long as at least 50% of your travel days were spent on your rental property business, your trip may still be tax-deductible

Of course, any lodging and meal expenses incurred on non-business days are not tax-deductible as a travel expense, nor are the travel expenses for a spouse, partner, or child unless they accompanied you on the trip for a legitimate business purpose.

Final Thoughts on Deducting Travel Expenses

There are a variety of reasons people invest in real estate – recurring rental income, appreciation in property value over the long term – and of course, rental property travel expenses. 

Whether you’re traveling outside of your home market as a remote real estate investor or going to rental property you own in-town, travel expenses are typically deductible as long as they’re ordinary and necessary for your rental property business.

Jeff has over 25 years of experience in all segments of the real estate industry including investing, brokerage, residential, commercial, and property management. While his real estate business runs on autopilot, he writes articles to help other investors grow and manage their real estate portfolios.

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Rental Property Deductions You Can Take at Tax Time

Landlords can deduct most ordinary and necessary expenses related to the renting of residential property. This includes rental property tax deductions for use of a car, cleaning costs, mortgage interest payments, repairs, property taxes, utilities, and more. The deductions offset rental property income and are generally reported on Schedule E (Form 1040). However, the passive activity loss rules can limit your rental property deductions in certain cases.

Importance of tax deductions for rental property

Types of rental property income and how they’re taxed, rental property tax deductions, what’s not a deductible rental property expense, how to claim rental property deductions, effect of passive activities losses.

Key Takeaways

• In addition to regular rent payments, landlords renting residential real estate must include advance rent payments, expenses paid by your tenant on your behalf, property or services provided by the tenant, lease payments with an option to buy, lease cancellation payments, and certain security deposits as taxable rental income.
• Rental property tax deductions are available for a wide range of expenses related to the renting of residential property, including the cost of advertising, cleaning, insuring, managing, and repairing the property.
• No rental property deductions are available for personal expenses, even if they’re related to the renting of property you own. You can only claim your share of deductions if you only own part of the rented property.
• Passive activity loss rules can limit the impact of rental property deductions. However, exceptions apply for certain real estate professionals, and for people who actively participate in rental activities (that is, make management decisions about the rental property and own at least 10% of it).

Renting a house or other residential property can provide a steady source of income. But being a landlord also comes with its own set of financial responsibilities – including paying taxes on your rental income.

The good news is that there are several federal tax deductions available for people who own and rent residential properties. These tax breaks can help reduce your tax burden and increase your cash flow.

Whether you’re a long-time landlord or just starting out, claiming these deductions can make a significant difference in your bottom line. That’s why it’s important to be aware of and understand the tax deductions that apply to you.

Before diving into the tax deductions for rental real estate , let’s take a look at some of the common types of income you might receive when you rent residential property and how they’re taxed.

TurboTax Tip: If you rent out your home for fewer than 15 days during the year, you don’t have to include the rent payments in your taxable income for the year. However, you can’t deduct related expenses, either.

If you only own part of the property, you only have to report a proportional amount of the taxable rental income from the property.

Regular rent payments

Of course, you’ll receive periodic rent payments from your tenants. Rent is often paid monthly, but rent can be collected at other intervals. Regardless of how frequently it’s paid, periodic rent payments are considered taxable income.

Advance rent payments

Rent can be paid in advance, too. If you receive an advance payment, it’s included in your taxable income for the tax year you receive it. For example, if you sign a five-year lease and you immediately receive rent for the next tax year, you need to include the advance payment in your taxable income for the current tax year.

Security deposits

Tenants often must pay a security deposit when signing a lease. As the landlord, don’t include that payment as taxable income for that tax year if you might have to return the deposit to the tenant when the lease expires. However, if you end up keeping all or part of the deposit at any point because the tenant breaks the lease, include the amount you keep in your taxable income for that year.

If you keep all or part of the security deposit because the tenant damaged the rental property, include the amount you keep in your taxable income for that year if you deduct the cost of repairing the damage as an expense (see below). On the other hand, if you use the deposit to cover any repair costs, but don’t deduct the cost of repairs, don't include the amount you keep in your taxable income.

Also, if a payment is called a “security deposit,” but if it's really going to be used as a final rent payment, it’s really just an advance rent payment and is included in your taxable income for the tax year you receive it.

Expenses paid by the tenant

If your tenant pays any of your expenses – such as a utility or repair bill—and deducts the amount from the regular rent payment, the amount paid is treated as taxable income to you.

However, you can deduct an equal amount if the underlying expenses qualify as deductible rental expenses (see below).

Property or services provided by the tenant

What if your tenant pays you with property or services, instead of money? For example, the tenant is a carpenter who builds a deck on your rental property instead of paying rent for two months.

In that case, include the fair market value of the property or services provided in your taxable income. If you and the tenant agree upon a price for the property or services, use that price as the fair market value unless there’s evidence to the contrary.

Lease payments with an option to buy

If a rental agreement gives the tenant the right to buy your rental property, rent payments made under the agreement are generally taxable income for the tax year you receive them. However, if the tenant exercises his or her right to buy the property, payments received after the sale are treated as part of the selling price, not as rental income.

Lease cancellation payments

Sometimes tenants need to break a lease early. If a lease cancellation payment is required, you must include it in taxable income for the year you receive it.

Now that you have a better sense of what counts as taxable rental income, let’s review some of the more common tax deductions available for residential rental property expenses.

Generally speaking, you can deduct all ordinary and necessary expenses related to your rental property. You might also be able to write off up to 20% of your business income if you qualify for a special deduction available to small business owners.

Advertising costs

When your rental property is vacant, you need to get the word out about its availability. For example, you might place an ad online or in a local newspaper. Money you spend on advertising your rental property is deductible.

Auto expenses

If you use a car, truck, or van for activities related to your rental property, you can generally deduct your auto expenses. This includes expenses related to a vehicle you rent, not just for vehicles you own.

You can use either the standard mileage rate or your actual expenses to calculate this deduction.

For the 2024 tax year, the standard mileage rate is 67¢ per mile driven for rental property-related or other business purposes (65.5¢ per mile for 2023).

Actual expenses include gas, oil, repairs, insurance, and other ordinary costs associated with owning and operating a motor vehicle. However, you can only deduct the expenses for the miles that you drive for rental property activities as a rental property expense. If you also use your vehicle for personal driving, you can only deduct expenses for the miles you drive for rental property as a rental property expense.

Cleaning costs

Your rental property likely needs a good cleaning between tenants. Whether you hire a cleaning service or do it yourself, cleaning costs can add up quickly. However, you can deduct the ordinary and necessary costs of keeping your rental property clean.

Depreciation

Rental property depreciation deductions let you recover the cost of purchasing your rental property over time. For example, if you buy a house that you rent out to tenants, you can generally deduct a portion of the purchase price allocated to the building (but not the land) each year until your combined deductions equal the cost of the property.

If you build an addition, replace the roof, or make other improvements to the property, you can also claim depreciation deductions to recover those costs, too.

How much you can deduct each year for depreciation depends on your cost basis in the property, the property’s recovery period, and when the property is placed in service.

Disaster and theft losses

You may be able to deduct the damage, destruction, or loss of your rental property from a storm, fire, earthquake, or similar disaster. You might also be able to deduct losses from the theft of items you own that are in the rental property, such as a television or furniture that you provide for your tenants.

You’ll likely need to insure your rental property to protect yourself from damage, liability claims, and other potential risks. Premium payments for insurance coverage are generally deductible.

However, you can only deduct premiums that apply to that tax year. So, if you pay an insurance premium for a future year in advance, you can’t deduct that payment in the year you pay it.

Interest payments

Suppose you take out a loan to cover the cost of new appliances, furniture, or other necessary expenses for your residential rental property. As you pay back the loan, part of your payments will be for interest. The portion of your payments allocated to interest – as opposed to principal – are generally deductible.

However, you can’t deduct prepaid interest in the tax year you pay it. Instead, if you pay interest that’s allocated to next year or sometime after that, you have to wait to deduct the payment until the tax year to which the interest applies.

You may have also heard that business interest deductions are sometimes limited. Fortunately, you probably don’t have to worry about the limits. For the 2024 tax year, they only apply to businesses with average annual gross receipts over $30 million for the previous three years (average of over $29 million for 2023).

Legal and other professional fees

You might need to hire a lawyer, accountant, or other professional to handle issues related to your rental property. If so, their fees are generally deductible.

This includes fees for tax advice and preparation of tax forms related to your rental property. You can also deduct the cost to resolve a tax underpayment related to your rental activities.

However, you can’t deduct legal fees paid to protect title rights or to recover, develop, or improve rental property. Instead, these fees should be added to the property's basis and depreciated (see above).

Management fees

You might hire someone to manage your rental property. Property managers can handle tenant applications, rent collection, maintenance requests, and more. If you go that route, you can generally deduct the property management fees.

Mortgage interest payments

If you have a mortgage on your residential rental property, you can generally deduct interest paid on the loan. However, payments for principal are not deductible.

Points paid to take out a mortgage – sometimes called loan origination fees, maximum loan charges, or premium charges – are also deductible. But you have to deduct them gradually over the life of the mortgage.

Certain other costs of obtaining a mortgage on your rental property aren’t deductible, such as mortgage commissions, abstract fees, and recording fees. Instead, they’re added to the property's basis and depreciated (see above).

If you rent a second home or part of your primary residence, there are two different ways that mortgage interest for the property can be deducted – but you first have to divide the interest payments into rental use expenses and personal use expenses. Once the expenses are separated, you can write off the interest attributed to rental use as a rental property deduction. Then, the amount attributed to personal use might be deductible as an itemized deduction .

Qualified Business Income Deduction

While not a deduction of particular expenses, you might be able to claim the Qualified Business Income (QBI) Deduction if you meet the deduction’s many requirements.

Landlords can claim this deduction if their property rental activities are treated as a trade or business, or if they satisfy the requirements for a “safe harbor” exception under the QBI deduction rules.

If you qualify, you can deduct up to 20% of the net amount of qualified items of income, gain, deduction, and loss from your business.

Repairs and maintenance

The costs of repairing and maintaining residential rental property are generally deductible for the tax year you pay for it. This includes expenses required to keep the property in good condition, such as fixing a leaking faucet or painting a room.

Improvements, which add to the value of the property, aren’t immediately deductible. Instead, their costs are subject to depreciation and deducted gradually over a period of years (see above).

You’ll likely have to pay property taxes on your rental property. If so, those tax payments are deductible.

Other tax payments related to your rental property might be deductible, too. For instance, you might owe local occupancy taxes, which are deductible. If you have employees, Social Security and Medicare taxes withheld from their wages and paid to the IRS are also deductible.

Travel expenses

Landlords can generally deduct the cost of traveling away from home if the main reason for taking the trip is to collect rental income or manage, conserve, or maintain rental property. You can generally deduct 50% of meal expenses while traveling away from home, too.

Travel costs aren’t deductible if the main purpose for the trip is to improve rental property (as opposed to repairing or maintaining it). Instead, those costs can only be recovered through depreciation deductions (see above).

Electric, gas, water, and other utility bills you pay for your rental property are generally deductible. If your tenant pays for utilities, you can’t deduct them on your tax return.

You can also deduct the cost of telephone calls related to your rental activities, such as calls to your tenant or property manager.

While the rules for deducting ordinary and necessary expenses are relatively broad and allow for a wide variety of write-offs for landlords, not every expense (or 100% of every expense) related to residential rental property is deductible.

Here are a few situations where you can’t deduct certain expenses.

Personal expenses

Any personal expenses you pay generally aren’t deductible, even if they’re somehow related to your rental property. So, for example, if you take a trip away from home to collect rent, but end up staying an extra day or two for personal reasons, you can’t deduct any expenses related to the additional two days.

This type of situation also arises with utilities, insurance, maintenance costs, and the like if you rent part of your primary home, use your rental home for more than 14 days, or sometimes rent a second home. In that case, you need to divide your expenses between rental use and personal use, and only deduct those expenses related to renting the property (although the portion of your mortgage interest deemed a personal expense might also be deductible, as noted above).

Partial ownership of rental property

If you only own part of a rented property, you can only deduct expenses you paid multiplied by your percentage of ownership. You can’t deduct the remaining portion, but you can seek reimbursement of it from the other owners.

For example, if you own 50% of a rental property and pay $1,000 for repairs during the year, you can only deduct $500 for the repairs on your tax return ($1,000 x .50 = $500).

Local benefit taxes

You generally can’t deduct taxes for local benefits that increase the value of your rental property, such as taxes and fees for putting in streets, sidewalks, or water and sewer lines. Instead, these taxes are added to the property’s basis and depreciated (see above).

Commuting costs

Auto expenses for traveling between your home and a rental property are generally nondeductible commuting costs unless you use your home as the place from which you manage your rental property.

Rental property that’s for sale

If you're selling a rental property, you can generally deduct the cost of managing, maintaining, or preserving the property until it's sold. But if the property isn't held out and available for rent while it's listed for sale, the expenses aren’t deductible as rental expenses.

Rental income and expenses are generally reported on Schedule E (Form 1040). The total income (or loss) is copied to Schedule 1 (Form 1040), where it’s combined with other forms of income and then reported on the main 1040 form.

Use Schedule C instead of Schedule E to report rental activities if you provided significant services to the tenant, such as regular cleaning, changing linens, or housekeeping services. Furnishing utilities, cleaning public areas, collecting trash, and similar services don’t count.

Also use Schedule C instead of Schedule E to report income and expenses from rental property you held for sale to customers as a real estate dealer.

You have to file Form 4562 if you’re depreciating property placed in service during the tax year.

If you’re claiming a disaster or theft loss for your rental property, use Form 4684 to calculate your loss.

Use either Form 8995 or Form 8995-A to calculate the QBI deduction.

The impact your rental property deductions have on your overall tax bill could be limited by the passive activity loss rules . That’s because the IRS generally treats rental property activities as passive activities.

However, there are a couple of exceptions to the passive activity loss rules that are designed for landlords. First, if you “actively participate” in a rental property activity, you might be able to deduct up to $25,000 of passive activity loss from nonpassive income, such as wages. However, the $25,000 amount is gradually phased out if your modified adjusted gross income is more than $100,000 ($50,000 if you’re married and filing a separate tax return ).

You can be treated as actively participating in rental property activities if you make management decisions, such as approving new tenants, deciding on rental terms, and approving expenditures. You must also own at least a 10% interest in the rental property to qualify for this exception.

Second, renting property isn’t treated as a passive activity if you materially participate in the activity as a real estate professional (material participation is a higher level of activity than active participation). Basically, to qualify for this exception, more than half your work time must be spent in real property-related trades or businesses, and these activities must total more than 750 hours per year.

File Form 8582 if you have passive activity losses that are subject to loss limitation rules.

Let a local tax expert matched to your unique situation get your taxes done 100% right with TurboTax Live Full Service . Your expert will uncover industry-specific deductions for more tax breaks and file your taxes for you. Backed by our Full Service Guarantee . You can also file taxes on your own with TurboTax Premium . We’ll search over 500 deductions and credits so you don’t miss a thing.

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The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.

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Tracking Travel and Mileage Deductions for Rental Properties

Travel and mileage make up a significant tax deduction for landlords. Keep detailed records using software like Landlord Studio.

PUBLISHED ON

Updated for the 2023 tax year

Travel and mileage form a significant tax deduction for landlords. Unless you live next door to your property you are going to spend time and money traveling to and from, whether this is traveling to pick up supplies, managing viewings, or doing property inspections. Instead of paying for the associated costs out of pocket, these travel expenses can be deducted against taxable income at the end of the tax year.

This will allow you to reduce your taxable income and maximize profits. To ensure you remain tax compliant, you need to know what travel expenses are deductible and how to calculate your mileage tax deduction.

About the travel and mileage tax deduction

For landlords, mileage, as well as other car-related and travel expenses, are deductible in the year incurred.

This means that come tax season, you can claim your expenses for gas, car maintenance, and more against your taxes. The IRS has set guidelines as to what constitutes a deductible travel expense, and these should be followed to avoid being penalized.

However, it’s important to note that if you do intend to claim your mileage allowance you will need to keep a detailed and accurate mileage log. The easiest way to keep a mileage log for taxes is with specifically designed software. Thankfully, if you’re using Landlord Studio you can easily log the distance, purpose and details of all of your travel and easily run a mileage report at the end of the tax year.

The Travel Expenses Must Be “Ordinary And Necessary”

In order for your travel expenses to be deemed legitimate, they need to be both ordinary and necessary.

For landlords, this might look like traveling to one of your rental properties to perform a routine inspection or traveling to meet accountants. It would not include, taking a longer route to work every day so you can drive past your rental properties or meeting another landlord friend for coffee.

Mileage expense examples that can be claimed for rental business purposes include:

• Traveling to your property to deal with tenants, maintenance, repairs
• Traveling to your property to show prospective tenants
• Traveling to collect supplies, such as building supplies for maintenance or renovations
• Traveling to meet with contractors, attorneys, accountants, etc.
• Traveling to landlord-specific classes or trade shows

Non-business related travel that cannot be claimed includes:

• Traveling to and from your house and your workplace (every day commuting)
• Making a detour to the grocery store on the way home from visiting your rental

Although what constitutes a travel expense can sometimes be ambiguous, it’s best to abide by the guidelines to avoid being penalized by the IRS . If you’re audited by the IRS and they determine that you have claimed unnecessary expenses (extra miles, for example), you could face penalties for overstating deductions, such as fines or even federal prison time. Negligence and not keeping relevant records can also lead to penalties.

What Are The 2021/2022 Mileage Tax Deduction Rates?

The easiest way to calculate mileage tax deductions is by using the standard mileage rate set by the IRS.

• For the 2021 tax year, the rate was 56 cents per mile
• For the first 6 months of the 2022 tax year, it’s 58.5 cents per mile .
• In recognition of significant gasoline price increases during 2022, the IRD adjusted the rate for the last 6 months of the 2022 tax year to 62.5 cents per mile.

What Is The 2023 Mileage Tax Deduction Rate?

The IRS increased the standard mileage rate for tax purposes by 3c per mile for the 2023 tax year.

‍ For the 2023 tax year, the standard mileage rate is 65.5 cents per mile.

These rates apply to electric and hybrid-electric automobiles, as well as gasoline and diesel-powered vehicles.

Using The Standard Mileage Rate To Calculate Your Deduction

To calculate your deduction, simply multiply your business miles by the standard mileage rate. For example, if you drove 10,000 business miles in 2023, you would multiply this by 0.0655 to give you a mileage tax deduction of $655.

In order to claim this deduction, you need to keep an exact record of the miles traveled, the dates and time of the travel, and the purpose of the travel. The easiest way to do this is to use an automated mileage tracker like the one built into the Landlord Studio app.

Other vehicle expenses you can claim in addition to mileage include business-related parking fees and tolls, interest on a car loan, and registration or license fees. You must use the standard mileage rate in the first year you use a car for your rental activity to be qualified to use this rate going forward. The bottom line is that unless your vehicle has high operating costs, the standard mileage rate should give you a significant deduction.

Claiming Actual Expenses Instead Of The Mileage Deduction

Another way to claim a mileage tax deduction is to deduct your actual expenses. This is a little more complex than using the standard mileage rate as you also have to track how much you spend on gas, oil, repairs, tires, insurance, and other car operating costs. Vehicle depreciation is also included here.

The downside of using this method to claim expenses is that it requires more record-keeping, so may not be worth it if you don’t drive much for work purposes. If done properly and/or your car has higher than normal operating costs, it can lead to healthy tax savings.

An easy way to help you track actual expenses is to use an income and expense tracking software (like Landlord Studio) which will allow you to record and categorize your travel expenses as they happen so you don’t miss any, and easily digitize receipts and recording the purpose of the travel in the notes section.

Whether you claim actual expenses or the standard mileage rate, the IRS stipulates that you must complete part V of Form 4562 and attach it to your tax return.

Other Travel Expense Deductions

Depending on how geographically widespread your rental property portfolio is, or if you’ve invested in out-of-state property , you may not always be able to travel for work by car. If this is the case, and you have to leave your city or state in which your business or work is located in order to manage your rental properties, you can deduct other expenses such as:

• Transportation : fares for airplanes, trains, buses, or if you rent a car .
• Meal and beverage: 50% of food and drink expenses.
• Lodging : 100% lodging expenses (hotel, motel, etc.) for days you work at your rental.

The Primary Purpose Of The Trip Must Be Work

For an overnight trip to be deducted, the primary purpose of the trip must be work. Although this sounds obvious, the IRS pays close attention to overnight business trips, so operating within the guidelines is a must.

Travel within the United States is subject to a hard-line rule whereby you can deduct 100% of your expenses for a business trip, but only if you spend more than half of your time on rental activities.

For example, if you go away for 6 days and work for 4 of those days and relax for 2 days, that can be expensed as a business trip. If, however, you’re only planning to work for 1 day but decided to extend the trip by 5 days to have a personal vacation while you’re already away, this cannot be counted as a work-related trip.

What To Include In Your Mileage Log For Taxes

Maintain a driving log (if claiming the standard deduction).

You must keep a log of the total miles driven if you choose to take the standard mileage deduction. The IRS specifically requires that you record the following:

• the odometer reading at the beginning and end of the trip
• the purpose of the travel,
• the start and end locations,
• and date of the trip.

The IRS does not care for ballpark figures, which means your mileage log must be maintained on a regular and consistent basis.

Tip: You can use the Landlord Studio's in-built GPS mileage tracker to easily keep an accurate and up to date mileage log.

Keep a Record of Receipts (If claiming the actual expense)

If you choose the actual expense deduction, you don’t need to maintain or record your mileage . Instead, keep copies of relevant receipts and documentation.

Each document must include:

• dollar amount of the service or service purchased,
• and description of the product or service needed.

The travel expense must be incurred within the tax year for which you’re making the claim.

How To Track Your Rental Mileage Tax Deduction

Your accounting software should have a built-in mileage tracking tool. Landlord Studio for exmple, has an automatic GPS mileage tracker that will save you time and simplify the process of tracking your travel and mileage expenses. Claim the maximum allowable deduction at tax time.

What’s more is that at the end of the tax year, you can instantly generate a mileage report to calculate your overall deduction for the year. This report can be generated on any device whenever you need it and all data is securely stored in the cloud for posterity.

If you choose to track your actual expenses or have other travel expenses such as airfares Landlord Studio can be used to easily record and categorize these and reports run at the end of the year.

All reports can be downloaded or shared directly from the software with your accountant or business partners.

Tracking your mileage tax deduction for rental property accurately is key to maximizing your tax deductions and avoiding being penalized by the IRS.

Landlord Studio has an in built GPS mileage tracker that makes it easier to stay compliant by allowing you to track your travel expenses and then create relevant reports at the tap of a button.

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• Credits and deductions
• Homeownership

What kinds of rental property expenses can I deduct?

By turbotax • updated 1 week ago.

The IRS lets you deduct ordinary and necessary expenses required to manage, conserve, or maintain property that you rent to others. You're allowed to deduct these expenses if your property is vacant, as long as you're trying to rent it .

Expenses are generally deducted in the year you pay them (if you use the accrual method, go here for more info). For example, if a pest-control company serviced your rental in 2023 but you didn't pay them until early 2024, you'd deduct that expense on your 2024 tax return.

Deductible expenses include, but aren't limited to:

• Cleaning and cleaning supplies
• Maintenance and related supplies
• Travel to and from the property
• Management fees
• Legal and professional fees
• Commissions
• Taxes and tax return preparation
• Lease cancelation costs
• Advertising
• Real estate taxes
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Rental properties and travel expenses

If you have a residential rental property, you may not be able to claim a deduction for related travel expenses.

Last updated 16 June 2024

Deductions for travel expenses

Travel expenses include the costs you incur on car expenses, airfare, taxi, hire car, public transport, accommodation and meals to:

• inspect, maintain or collect rent for a rental property you own or have an ownership interest in
• travel to any other place as long as it is associated with earning rental income from your existing rental property (for example, visiting your real estate agent to discuss your current rental property).

Prior to 1 July 2017:

• you could claim your travel expenses relating to your residential rental property, and
• you didn’t include the travel expenses in the cost base or reduced cost base when calculating any capital gain or capital loss when you sold the property.

From 1 July 2017 you can't claim any deductions for the cost of travel you incur relating to your residential rental property unless you are either:

• in the business of letting rental properties
• an excluded entity .

A residential premises (property) is land or a building that is:

• occupied as a residence or for residential accommodation
• intended to be occupied, and is capable of being occupied, as a residence or for residential accommodation.

To be residential premises, the premises must be fit for human habitation.

For example, a house or a unit used as residential accommodation to produce rental income is residential rental property.

A caravan or a houseboat is generally not residential rental property.

Example: individual with residential rental property

Sarah owned and rented out her residential rental property in the 2023–24 income year. She travelled to the property to repair damages caused by tenants during the year.

As the investment is a residential property and Sarah is not in the business of letting rental properties or an excluded entity, she can't claim a deduction for her travel expenses.

Commercial rental properties, for example factories or office blocks, are not residential rental properties. If you own or have an ownership interest in a commercial rental property, you can claim a deduction for travel expenses incurred in earning your rental income from the property.

Example: ownership interest in commercial property

Kei is the sole owner of a commercial rental property. Her husband, Bert, occasionally drives to the rental property in his own car to undertake maintenance. As he has no ownership interest in the property, Bert can't claim travel expenses. Similarly, since Kei didn't travel to the property to undertake the maintenance, she can't claim a deduction.

As the property is a commercial rental property rather than a residential rental property, if Kei and Bert co-owned the property, Bert could share his travel expenses with Kei in line with their legal interest in the property.

Example: individual with a commercial investment property

In the 2023–24 income year, Greg purchased a shopfront and leased the property to Paul. Paul used the shopfront to operate a bakery and paid rent to Greg under a 12-month lease contract.

Greg travelled to the shopfront to inspect the property at the end of the tenancy agreement. As the property was used for commercial purposes, Greg can claim the travel expenses.

In the business of letting rental properties

You can claim your travel expenses if you are in the business of letting rental properties. Generally, owning one or several rental properties will not be considered being in the business of letting rental properties.

If you are an individual and you receive income from letting property to a tenant, or multiple tenants, you are not typically carrying on a business of letting rental properties. Generally, we consider your activities are a form of investment rather than a business, so you can't claim deductions for travel expenses.

Entities that can claim travel expenses

You can claim travel expenses, if you're a:

• corporate tax entity
• superannuation plan that is not a self-managed superannuation fund
• public unit trust
• managed investment trust
• unit trust or a partnership, where all of the members are entities of a type listed above.

Example: an excluded entity in 2023–24

Terry's Pty Ltd, a property manager, incurred travel expenses in 2023–24 to inspect a tenanted residential investment property. Since Terry's Pty Ltd is a corporate tax entity (a company), it can claim a deduction for travel expenses.

Travel expenses you can't claim

Even if you are eligible to claim travel expenses, you still can't claim for expenses related to:

• your personal use of the property or for purely private purposes
• carrying out general maintenance of the property while it's not genuinely available for rent
• undertaking repairs, where those repairs are not because of damage or wear and tear incurred while you rented out the property.

For example, if you travel to undertake initial repairs before you rent the property for the first time, these are capital expenses and may be included as part of the cost base for capital gains tax calculation when the property is being sold later.

If your travel expenses are partly for private purposes and partly related to the rental property, you can only claim the amount relating to the rental property.

Travel expenses before you purchase

You can't claim for travel expenses to inspect a property before you buy it.

You also can't claim for travel expenses to (or other costs for) rental seminars about helping you find a rental property to invest in.

Seminars are only tax deductible if they relate to earning rental income from your existing rental property. When a seminar teaches you how to locate a suitable rental property to buy, you can't claim a deduction against rental income for the cost of the seminar because the costs incurred are 'too soon' before the commencement of the income producing activity.

Some promoters have incorrectly told taxpayers that they can claim the cost of their travel to and from a property they may purchase. You can't claim these costs for properties within Australia nor overseas.

Travel expenses you can claim

If you are in the business of letting rental properties or an excluded entity , and eligible to claim travel expenses, the types of expenses you can claim include:

• preparing the property for new tenants (except for the first tenants)
• inspecting the property during or at the end of tenancy
• undertaking repairs, where those repairs are because of damage or wear and tear incurred while you rented out the property
• maintaining the property, such as cleaning and gardening, while it is rented or genuinely available for rent
• collecting the rent
• visiting your agent to discuss your rental property.

For more information, see Rental expenses to claim .

If you use your own car to travel to inspect your rental property or to collect rent, you must use the same method to calculate your deductions as work-related car expenses .

Overnight travel

You can claim a deduction for travel expenses for travelling to your rental property if:

• you own a rental property that is far away from where you live
• it would be unreasonable to expect you not to stay near the rental property overnight when making an inspection
• your main purpose in travelling was to inspect and maintain the rental property.

Where you stay overnight, you can claim meals and accommodation.

Where your trip is mainly for private purposes (for example, having a holiday) and inspecting the property is incidental to that main purpose, you can't claim the costs of getting to your destination or returning home. You can only claim local expenses incurred after you arrive at your destination that are directly related to the property inspection such as taxi fares to and from the rental property. You may also be able to claim a proportion of your accommodation expenses.

Example: apportionment of travel expenses

Bill and Marli King are joint owners of a residential rental property in a resort town on the north coast of Queensland. In 2016–17, they spent $1,800 on airfares and $1,500 on accommodation when they travelled from their home in Melbourne, mainly for the purpose of holidaying in the resort town, but also to inspect the property. They also spent $100 on taxi fares from the hotel to the rental property and back. The Kings spent:

• one day (10% of their total time in Queensland) on matters relating to the rental property
• 9 days (90% of their total time in Queensland) swimming and sightseeing.

They can't claim a deduction for any part of the $1,800 airfares because the main purpose of the trip is a holiday and the property inspection is incidental.

Since the travel expenses were incurred in the 2016–17 year, they can claim deductions for the $100 taxi fares and $150 as a reasonable apportionment of the accommodation expenses (that is, 10% of $1,500).

The total expenses the Kings can claim are therefore $250 (that is, $100 taxi fares plus $150 accommodation). Since they jointly own the rental property, they can claim a deduction of $125 each.

Example: apportioning accommodation expenses

Jabari is the sole owner of a rental property on the Gold Coast. In 2016–17, he travels from Sydney to the Gold Coast to undertake deductible repairs on his rental property but takes his spouse, Kym, with him for company and to share the driving. Jabari and Kym stay in a hotel where the cost of a:

• single room is $55
• double room is $70

A reasonable basis for apportionment of accommodation expenses in this instance is to claim the single room rate of $55 (rather than half the double room rate), as Jabari would have stayed in the single room if Kym had not travelled with him.

Overseas travel

If you are an Australian resident and own a rental property overseas, you may travel overseas on holiday and inspect your rental property at the same time.

If the main purpose of the trip is a holiday, you can't claim the cost of getting there. You can only claim local expenses incurred after you arrive at your destination that are directly related to inspecting the property, such as taxi fares to and from the rental property. You may also be able to claim a deduction for part of your accommodation expenses.

You must be able to show your reason for visiting the rental property.

The records you keep, such as invoices for your accommodation or airline tickets, will help you do this.

Record keeping for travel expenses

If you can claim your travel expenses and you travel over a considerable distance to inspect a rental property (for example, interstate), you need written records to show that you travelled and what expenses you incurred.

Written records can include:

• a travel diary
• airline tickets
• accommodation
• other purchases while travelling
• items you used for repairs and maintenance that you purchased when you travelled to, or stayed near, the rental property.

If you spend 6 or more nights away from where you live, you must keep a travel diary or similar document that shows the nature of the activities, dates, places, times and duration of your activities and travel.

What do I need to know about mileage deductions for my rental property investments?

• June 30, 2022

As a rental property owner, you need to be familiar with the deductions related to your investment that the IRS allows you to claim. Most expenses are straightforward and have a transaction record, like a repair or property management fees. These are relatively easy to track and deduct, especially with a separate bank account for your rentals and some good accounting software. However, not all expenses are quite so clear-cut. Some, like driving for your rental activities, require additional record-keeping and are only deductible in certain circumstances.

In this article we will explore when you can and cannot claim mileage, the best method to determine the expense amount, and what exactly the IRS requires to take a deduction.

When is mileage a deductible expense for my rental property?

Let’s hear what the IRS has to say on the matter, and then break it down:

Local transportation expenses. You may be able to deduct your ordinary and necessary local transportation expenses if you incur them to collect rental income or to manage, conserve, or maintain your rental property. However, transportation expenses incurred to travel between your home and a rental property generally constitute nondeductible commuting costs unless you use your home as your principal place of business. (From Publication 527 (2023), Residential Rental Property )

The IRS allows you to claim travel expenses for business tasks that are ordinary and necessary- meaning- legitimate, common tasks that actually help your business. Collecting rent and maintaining your rentals are examples of ordinary and necessary tasks that would allow you to claim a mileage deduction.

So if you drive to the bank to deposit a check after picking it up from a renter, or to the home improvement store and back from your rental, you can claim those miles.

But what about the miles between your home and the rental before picking up that check? The second half of the IRS guidance above says that travel between your home and your rentals is a nondeductible commuting cost. The IRS doesn’t let you deduct your commute to your 9-5 job, and applies the same logic here. But does that really also apply to rental property investors?

Well, as seen above- you CAN deduct those miles if “you use your home as your principal place of business.” The IRS defines the principal place of business in a few ways, including ‘where the books are kept.’ For the vast majority of real estate investors, that means your home is your principal place of business. If you do your books at home, then it qualifies, and you can deduct mileage starting from the time you leave your home.

What method should I use to determine my travel expenses?

The IRS allows you to choose one of two methods for determining your driving expenses: the standard mileage rate and actual expenses.

The easiest and recommended method is to use the IRS standard mileage rate. For 2021, that rate is 56 cents per mile (down from 57.5 cents in 2020). So to calculate the amount of your driving expense, simply take the number of deductible miles you have driven and multiply by 0.56.

When using the standard mileage method, additional expenses can also be deducted for tolls, parking, and prorated property tax and loan interest

The other option is the actual expenses method. You take the total amount spent on the vehicle, and multiply it by the percentage of total miles that were driven for rental purposes as opposed to personal use. If you drove 12,000 miles in a year, and 1200 of those miles were for your rental business, then you can deduct 10% of your actual expenses from that year.

To use this method, you need to track and keep records for every single expense associated with operating and maintaining your vehicle- like gas, insurance, oil changes, and maintenance. This also includes lease payments if you don’t own the vehicle, or depreciation if you do.

If you are great at keeping organized records and take infrequent personal trips in your vehicle, the actual expense method may yield a larger tax deduction than the standard mileage rate. For most investors though, tracking actual expenses is not worth the time and may actually result in a smaller deduction. If you are in doubt, the standard mileage rate is the way to go.

What records do I need in a mileage log for my rental properties?

The IRS requires you to record your miles driven in a particular fashion. They want more than “18 miles on March 1st.” In addition to odometer readings at the beginning and end of the year, the IRS prefers per trip records to include the date, miles driven, the vehicle used, and the purpose of the trip and/or destination(s).

As with most operational records, it’s far easier to keep up with your record-keeping than to catch up. Using accounting software with a built in mileage tracker, or a standalone system, is a great way to stay on top of it.

Please note that if you choose to use the ‘actual expenses’ method, you will also need to keep records for all of your vehicle related expenses in the calendar year, in addition to the per trip records.

How is mileage reported on your tax forms?

For most real estate investors and rental property owners, the IRS Schedule E (link) is the standard form where rental income and expenses are reported. Mileage and other travel related expenses can be reported under the ‘Auto and Travel’ expense category.

This is one area where your Schedule E will not mirror your Profit and Loss statement. Mileage (if taken at the standard rate) and depreciation expenses are not typically a part of traditional Net Income or Cash Flow reports, as they are not directly incurred expenses.

Additionally, if you want to claim local travel expenses, either with the actual expenses method or standard rate method, there is one additional step. The IRS requires Form 4562, which lays out details of the vehicle being used, to be filed alongside your regular return. Only Part V, Sections A and B, need to be completed.

What about other travel related expenses?

In this article, we focused exclusively on mileage and local travel expenses.  But what about when you travel out of your local area to manage, maintain, or shop for new rental properties?  The IRS has a whole section of rules governing those expenses as well.

The short answer: if your trip is primarily for your rental business, ordinary expenses generally will be deductible.  However, if your trip is not entirely for business, you must prorate out your business vs personal expenses. Trips to improve your property are not deductible, as those costs are recovered with depreciation.  Meals are usually deductible at 50%.

You can claim mileage deductions for most of the local travel you do in the normal course of operating your rental property business.

So, if you’re on the road for your rentals- you should be claiming your mileage! Using the standard mileage rate makes taking this deduction much simpler. However, the IRS keeps a closer eye on deductions with the potential for abuse, like mileage, so make sure you maintain your records in their preferred format.

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Business Travel Expenses for Rental Owners [2023 Update]

In general, business travel expenses must be considered both “ordinary and necessary” to be tax-deductible. Ordinary means it is common and accepted within the trade or business. Necessary means it is helpful and appropriate for the trade or business.

As a real estate investor, you’ll likely travel to and from your rental properties, other business locations, new markets, and education related events. While most of these activities are indeed ordinary and necessary, you must understand the rules for deducting travel expenses.

Local Business Travel Expenses

Most rental property owners routinely travel to and from rental properties located within driving distance. You might also travel to the bank, the hardware store, or to meet with your broker, your attorney, and so on.

If you established a home office, these miles are considered business miles and are tax deductible within your “tax home.” Your “tax home” is considered the geographic location (that is, the city or locality) where you have an established rental business that functions as your place of business.

There are usually two ways you can deduct these trips: 

• using the actual expense method, or 
• the standard mileage deduction.

Both methods require you to keep an IRS-compliant mileage log that contains the following:

• odometer at the beginning of the year 
• odometer at the end of the year
• the date of your trip
• the purpose of the trip 
• the amount of miles of the trip
• locations of your trip

Remembering to log the trip each time you drive somewhere for business can be a challenge. Use an automatic mileage tracking app like MileIQ in tandem with Stessa’s mileage expense feature to make sure you’re not missing any deductible miles.

Standard Mileage Rate

The standard mileage rate is the simplest way to deduct local travel expenses because it requires the least amount of tracking. 

Simply take the number of miles you drove for business and multiply it by the standard mileage rate to get your deduction. The standard mileage rate for 2022 is 58.5 cents per mile for 1/1/22 – 6/30/22 and 62.5 cents per mile from 7/1/22 to 12/31/22. The Internal Revenue Service (IRS) has updated the optional standard mileage rate in 2023 to 65.5 cents per mile for business travel.

You drive a total of 10,000 miles in 2023. 6,700 of those were business miles. Your mileage deduction for 2023 is $4,388.50 ($0.655 x 6700 miles).

The sole actual expenses you can deduct under this method, in addition to the mileage, are parking fees, tolls, interest on a car loan, and personal property tax on the vehicle.

To use the standard mileage rate, you must use it in the first year you use your vehicle for business purposes, otherwise you can only use the actual expense method. However, you can later switch to the actual expense method, and back again, so it’s generally best to start with the standard mileage rate.

Actual Expense Method 

Under the actual expense method, you can deduct a portion of your actual expenses from operating your vehicle. These expenses include, but are not limited to:

• lease payments
• gas and oil
• tolls and parking fees
• depreciation
• interest on car loans
• repairs and maintenance
• car washing
• other fees (for example, registration fees)

Note: Tickets and violations are NOT tax deductible.

Your deduction is based on the percentage of actual miles driven that you used your vehicle for rental business. This percentage is determined by dividing the amount of miles you drove for business by the total miles you drove for the year (business miles/total business and personal miles).

You will also need to keep records (receipts) of all these expenses throughout the year. Stessa’s mobile app can help as it includes OCR and machine learning to capture and automatically categorize receipts for free.

You drove a total of 10,000 miles in 2022. 6,700 were business miles. Your business percentage for the vehicle is 67% (6,700/10,000). After tallying up all the expenses related to your vehicle, the total is $8,000 for the year. You can deduct $5,360 for 2022($8,000 x 67% ).

Business Travel Expenses for New Markets

Travel expenses are treated differently when traveling to a new market outside of your tax home. 

Travel expenses incurred to research and evaluate any new property that you eventually purchase outside of your tax home will be added to the basis of the property and depreciated over 27.5 years. Once you purchase a rental property in the new geographic area, additional new travel to the same area to evaluate other potential acquisitions becomes tax deductible as a business expense.

If your rental activities rise above the level of “investor” (Frank v. Comm’r., 20 T.C. 511) then travel costs to look for properties falls into two categories:

• Expenses incurred to look at properties you purchase, and
• Expenses incurred to look at properties you don’t purchase.

Expenses incurred to look at the property you ultimately acquire will be added to the basis and depreciated over 27.5 years (Rev. Rul. 77-254).

Expenses incurred to look at property within a geographic location in which you already operate as a landlord are fully deductible assuming they are ordinary and necessary for the conduct of your landlord business. Expenses incurred to look at a property in a geographic location in which you do not already operate as a landlord are considered business start-up expenses. This is documented in O’Donnell v. Comm’r., 62 T.C. 781.

As with other expenses, travel must be ordinary and necessary.

Perhaps surprisingly, travel expenses incurred to evaluate property in a new market in which you don’t eventually purchase a property are not immediately deductible. These are considered start-up expenses that can only be deducted after purchasing your first property in the new geographic area.

What Types of Business Travel Expenses are Deductible?

Transportation .

Transportation to and from the business destination is tax deductible. This includes but is not limited to:

• train and bus tickets
• car expenses (see above)

Other transportation costs that are deductible include:

• expenses for travel to and from the airport (taxi, bus, etc.)
• from the lodging area (hotel, Airbnb, etc.) to the business location (potential rental property, conference center, etc.)
• rental cars

Lodging expenses (such as a hotel, Airbnb, etc.) on overnight stays that are required for sleep or rest are deductible.

Other Expenses 

• business meals outside of your tax home are 50% tax deductible
• dry cleaning 
• other ordinary and necessary business travel expenses

Entertainment is no longer tax deductible under The Tax Cuts and Jobs Act.

Mixing Personal & Business Travel

When you mix business travel with personal travel as many small business owners do, some of the expenses (like airfare) may still be tax deductible if the trip was primarily for business purposes. 

In general, this means you should be spending more than half of the total number of days you’re traveling on business activities versus personal activities. A day is considered a business day if you spend four or more hours on business activities.

However, lodging expenses, meals, and other expenses incurred during days primarily dedicated to non-business purposes are not tax deductible. In addition, any travel expenses for a spouse (or child) that isn’t traveling for a “bona fide” business purpose is not tax deductible.

Also keep in mind that if the trip is primarily for personal purposes, travel to and from the destination is not tax deductible but business expenses incurred during the same trip are deductible. 

You go on a seven-day business trip to visit your out-of-state investment portfolio and spend five days on business and the other two at the beach.

Because this trip was primarily for business purposes, the entire round-trip airfare, plus lodging, meals and related expenses for the five business days are business-related tax deductible. However, lodging, meals, and other expenses from the two personal days are not deductible.

Check out more topics on rental property tax deductions: 

• Rental Property Accounting Basics
• 9 Common Landlord Tax Deductions
• Pass-Through Deductions and Casualty Losses
• Rental Property Depreciation Overview
• Capital Improvements vs. Repairs and Maintenance Expenses
• Passive Activity Limits and Passive Losses
• Capital Gains, Depreciation Recapture, and 1031 Exchange Rules
• Short-Term Rentals and Related Taxes

While reasonable efforts were taken to furnish accurate and up-to-date information, we do not warrant that the information contained in and made available through this guide is 100% accurate, complete, and error-free. We assume no liability or responsibility for any errors or omissions in this guide.

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Topic no. 511, Business travel expenses

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Travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession, or job. You can't deduct expenses that are lavish or extravagant, or that are for personal purposes.

You're traveling away from home if your duties require you to be away from the general area of your tax home for a period substantially longer than an ordinary day's work, and you need to get sleep or rest to meet the demands of your work while away.

Generally, your tax home is the entire city or general area where your main place of business or work is located, regardless of where you maintain your family home. For example, you live with your family in Chicago but work in Milwaukee where you stay in a hotel and eat in restaurants. You return to Chicago every weekend. You may not deduct any of your travel, meals or lodging in Milwaukee because that's your tax home. Your travel on weekends to your family home in Chicago isn't for your work, so these expenses are also not deductible. If you regularly work in more than one place, your tax home is the general area where your main place of business or work is located.

In determining your main place of business, take into account the length of time you normally need to spend at each location for business purposes, the degree of business activity in each area, and the relative significance of the financial return from each area. However, the most important consideration is the length of time you spend at each location.

You can deduct travel expenses paid or incurred in connection with a temporary work assignment away from home. However, you can't deduct travel expenses paid in connection with an indefinite work assignment. Any work assignment in excess of one year is considered indefinite. Also, you may not deduct travel expenses at a work location if you realistically expect that you'll work there for more than one year, whether or not you actually work there that long. If you realistically expect to work at a temporary location for one year or less, and the expectation changes so that at some point you realistically expect to work there for more than one year, travel expenses become nondeductible when your expectation changes.

Travel expenses for conventions are deductible if you can show that your attendance benefits your trade or business. Special rules apply to conventions held outside the North American area.

Deductible travel expenses while away from home include, but aren't limited to, the costs of:

• Travel by airplane, train, bus or car between your home and your business destination. (If you're provided with a ticket or you're riding free as a result of a frequent traveler or similar program, your cost is zero.)
• The airport or train station and your hotel,
• The hotel and the work location of your customers or clients, your business meeting place, or your temporary work location.
• Shipping of baggage, and sample or display material between your regular and temporary work locations.
• Using your car while at your business destination. You can deduct actual expenses or the standard mileage rate, as well as business-related tolls and parking fees. If you rent a car, you can deduct only the business-use portion for the expenses.
• Lodging and non-entertainment-related meals.
• Dry cleaning and laundry.
• Business calls while on your business trip. (This includes business communications by fax machine or other communication devices.)
• Tips you pay for services related to any of these expenses.
• Other similar ordinary and necessary expenses related to your business travel. (These expenses might include transportation to and from a business meal, public stenographer's fees, computer rental fees, and operating and maintaining a house trailer.)

Instead of keeping records of your meal expenses and deducting the actual cost, you can generally use a standard meal allowance, which varies depending on where you travel. The deduction for business meals is generally limited to 50% of the unreimbursed cost.

If you're self-employed, you can deduct travel expenses on Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship) , or if you're a farmer, on Schedule F (Form 1040), Profit or Loss From Farming .

If you're a member of the National Guard or military reserve, you may be able to claim a deduction for unreimbursed travel expenses paid in connection with the performance of services as a reservist that reduces your adjusted gross income. This travel must be overnight and more than 100 miles from your home. Expenses must be ordinary and necessary. This deduction is limited to the regular federal per diem rate (for lodging, meals, and incidental expenses) and the standard mileage rate (for car expenses) plus any parking fees, ferry fees, and tolls. Claim these expenses on Form 2106, Employee Business Expenses and report them on Form 1040 , Form 1040-SR , or Form 1040-NR as an adjustment to income.

Good records are essential. Refer to Topic no. 305 for information on recordkeeping. For more information on these and other travel expenses, refer to Publication 463, Travel, Entertainment, Gift, and Car Expenses .

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