5 Tips for Those Looking to Make Their Summer Vacation a Real Estate Tax Write-Off

5 Tips for Those Looking to Make Their Summer Vacation a Real Estate Tax Write-Off

3 min read
Amanda Han

Amanda Han has been a CPA specializing in tax strategies for real estate, self-directed investing, and individual tax planning for over 18 years. She’s been investing in real estate herself for over 10 years with a focus on long-term hold residential and multifamily assets across multiple states.

Experience
As both a tax strategist and real estate investor, Amanda combines her passion of real estate investing with her expertise in tax. Her goal is to help investors with strategies designed to supercharge their wealth-building using entity structuring, self-directed investing, and income offset opportunities to keep more of what they make.

Her highly rated book Tax Strategies for the Savvy Real Estate Investor is amongst Amazon’s bestseller list. Amanda is also a frequent contributor, speaker, and educator to some of the nation’s top investment and self-directed IRA companies.

Amanda and her husband Matt MacFarland have a passion for animals and founded Animals for Armed Forces, a non-profit organization that has helped to place over 1,800 shelter pets with forever homes.

Press
Her cutting-edge tax strategies have been featured in prominent publications, including Money Magazine, Realtor.com, and AllBusiness.com. Amanda was a speaker at “Talks at Google” that features influential thinkers and creators. Amanda has also appeared in CNBC’s Smart Money Talk Radio, as well as BiggerPockets podcasts.

She is a 40 under 40 honoree by CPA Practice Advisor, showcased amongst the best and brightest talent in the accounting profession. Her firm Keystone CPA, Inc. was awarded a two-time winner of the Top CPA of Orange County Award by OC Metro Magazine.

Accreditations
She is certified by the CA State Board of Accountancy and is a member of the prestigious American Institute of Certified Public Accountants (AICPA) with clients across the nation.

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As an investor, I love looking at houses wherever I go. In fact, I am probably like most investors who always have real estate on the mind. Whether traveling to look for properties or managing properties while on the road, a portion of all of my travel trips undoubtedly involve some sort of “work” related to my investing.

Contrary to popular belief, just because I happen to work on my real estate during my trip does not automatically mean it’s a tax deductible trip.

Although it is possible to take a tax deduction for part of all your travel costs, if they are business related, you need to first be sure that you have everything in place to legitimately get the write-off. Yes, I did say “legitimately.” That means that if you get audited, you have the documentation and support to win the argument over the IRS.

5 Tips for Those Looking to Make Their Summer Vacation a Real Estate Tax Write-Off

In order to make this possible, there is some action that is needed on your part before you even take your trip. Let’s take a look at an example of how Judy, an investor, can maximize her travel tax deductions.

1. Schedule appointments and plan meetings before leaving.

The sun is out, and it’s time to play. If you think you can just hand out your business cards while you are on the beach in Florida to get a tax deduction, you are definitely wrong.

Related: 5 Tips For Maximizing Your Tax Income Deductions For NEXT Year

In order to make your trip deductible, you need to schedule at least one business meeting or activity before leaving for your trip. The IRS wants to know that you had a “prior set business purpose” in order to write off your travel costs.

For example, if you “happened” to attend a real estate conference while in Florida, that does not mean you went to Florida for business purposes. On the other hand, if you pre-registered for this Florida conference, then you can show that the reason you went to Florida was to attend this real estate conference.

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This is a subtle but very important distinction. The best way to document this is with email. Emailed registration paperwork or receipts are strong documents that can help substantiate your travel “purpose.”

Example: Judy wants to take a trip to sunny Florida. If she schedules multiple meetings and appointments with her business contacts and colleagues or conducts a presentation meeting to a group of other investors, the IRS can accept her trip as a tax deduction for her business.

2. Find ways to deduct on-the-road expenses.

If you want to deduct all of your travel expenses (i.e., flight or driving costs), then you need to be traveling primarily for business. You can deduct 100 percent of your travel expenses according to the IRS as long as more than 50 percent of your trip was business-related.

Example: Judy was traveling on a five day trip. For her, three out of five business days she spent in Florida were related to her investing business. Since more than 50 percent of her time was spent on real estate investing activities, then the entire cost of the trip would be tax deductible to Judy.

3. Remember: Every day counts for your travel expenses.

Each day that you are traveling provides you opportunities to capture tax deductions. One hundred percent of your hotel, gratuity, and car rental and 50 percent of your food costs may be tax deductible.

Example: Judy is away on a business trip for four days and has meetings planned with investors most of those days. She can deduct the costs for her meals and entertainment for those days. In fact, even if Judy decided to eat by herself on these days, those would still be tax deductions if the primary reason for this trip was related to her investing business.

4. Throw away those receipts.

A lot of people may not know that the IRS does not require you to keep receipts for certain expenses under $75 (except for your hotel). Just because you do not need receipts does not mean you don’t need to track your expenses, because odds are high that if you don’t track your expenses, you will forget about them by next April’s tax deadline.

Example: Make sure you include expenses such as laundry, dry cleaning, tips, parking, meals, entertainment, etc. Even the first dry cleaning bill you receive when you return home may be fully tax deductible.

why buy vacation home

Related: The New Rules Of The IRA Rollover: How To Protect Your Money From The Taxman’s Penalties

5. Include a weekend in your travel plans.

If you have a business meeting on a Friday and schedule another meeting on a Monday, then you may be able to legally deduct your entire hotel and on-the-road expenses for the weekend in between.

Example: Judy has a presentation with potential investors on a Friday and scheduled follow-up appointments with the investors for Monday. Although she did not have any meetings on Saturday or Sunday, she can deduct any on-the-road expenses and hotel costs she incurs during the weekend.

Taxes can be fun when you find creative ways to save more of your hard-earned money. Before you take that vacation this year, plan ahead and look for ways to turn it into a business trip.

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