@Brandon Turner recently touched on the deduct-ability of travel when visiting your out of town properties on the podcast, so I thought I would chime in. You may deduct 100% of your transportation expenses only if you spend more than 50% of your time on rental activities while at your destination. In other words, your rental activity days must outnumber your personal days. If you spend more time on personal activities than on rental activities, you get no transportation deduction. You may also deduct the destination expenses you incur on days when you do rental-related tasks such as the hotel bill, 50% of meals, parking ect . Expenses incurred on personal days at your destination are nondeductible. If your trip is primarily a vacation, more than 50% personal activities, the entire cost of the trip is a nondeductible. As long as your trip is primarily for your rental activity, you can add a vacation to the end of the trip, make a side trip purely for fun, or even enjoy evenings doing vacation activates, and still deduct your entire airfare, rental car, or standard mileage rate if using your own car. A hint to those taking kids to theme parks. Most the parks stay open till 11 or 12 midnight and it’s a lot cooler and less crowded in the evenings so leave the wife and kids at the pool in the hotel during the day and hit the parks at night. What you spend while having fun is obviously not deductible, but you can deduct all of your expenses while conducting rental activities. Another example, if you like to go to a particular ski resort a couple times a year. You buy a couple of rentals in and around the resort. Then take 3 days repair or improve the property, meet with the property manager, accountants, or lawyers about property then put in 2 days skiing. You can write off 100% of your travel but only 3 of the 5 days hotel stay and 50% of the meals and beverages during the first 3 days. Be careful looking at new properties might be considered “investor” activities so even if your looking at new deals while your there make sure you are also conducting other “rental related activates".
I must be missing something, but my question after reading this was who's gonna know if you spend one day checking on your rental property and four days at Disney land....?
@Ken Taté in the event of an IRS audit it's up to you to prove your expenses. Of course travel expenses to vacation destinations are always highly scrutinized. Make sure you always keep a log of what you did as rental real estate activites meetings with professionals and any documentation of those meetings. But just because their scrutinized doesnt mean you shouldn't take a legitimate expense. Even IRS sponsors continuing education for accountants at vacation destinations. Accountants will go sit in classes for several days then tack on a vacation at the end
Great information here! I recently met with my CPA and he gave me the same advice as far as writing off the trip. Funny thing is.... I just arrived at Disney today (Saratoga Springs), but cannot write it off as I have no rentals down here...yet!
GREAT info @Cameron Skinner ! Thanks!