Whether you are a full-time investor or weekend landlord, your landlord vehicle expenses will often be one of the largest expenses you will have each year to offset your investing income for tax purposes. The IRS gives the taxpayer 2 options – itemize each individual vehicle expense (fuel, oil changes, repairs and maintenance, etc.) or elect to expense by mileage, which is an estimate of your vehicle expenses based on the distance you traveled for investment purposes that year.
While your normal everyday commute to and from your office (if you have one) is not tax deductible, you are allowed to deduct the mileage you travel to pick up and deliver items to and from your properties, attend meetings, view potential homes to purchase or perform other business-related activities. The standard mileage deduction changes with each new tax year and covers fuel, oil, automotive fluids, and wear and tear on your car; you may NOT write these expenses off separately.
The IRS requires taxpayers electing the mileage deduction to maintain records of business mileage, including point of origin, destination, the date, the mileage traveled, and a brief description of the business purpose of EACH trip. While this may sound like a documentation nightmare, it is usually easier than tracking automotive expenses separately, especially fuel. Unless a vehicle is used 100% for business purposes, a taxpayer may not expense 100% of her fuel bills and will likely be required to track business mileage anyway. Be aware of your mileage deduction this tax season!
This is not intended as legal advice but rather as an educational overview. Please consult a tax attorney or your CPA for further clarification.
If you’re looking for an Orlando property management company that understands the complex parts of real estate investment, like landlord vehicle expenses and other topics, look into working with us! If you have questions, just feel free to reach out to us for a chat. We’d love to see if we’re a fit to work together for your property management needs.