Tax deduction vacation

[Jesse East]

I just finished two tax books, “Tax Free Wealth” and “Tax Strategies for the Savvy Real Estate Investor”, and both books talk about how to deduct vacation expenses with some planning. However, my tax advisor told me scouting properties does not count as a deduction.

This did refer to a specific trip we took for the day to another city a couple of hours away. We meet with several realtors at about 5 different properties. We schedule these appointments ahead of time and the only reason we took the trip was to look for properties, and that is all we did that day. I feel like based on what I have now read that this mileage at the least should be deductible and most likely lunch as well.

What are your thoughts?

[Natalie Kolodij]

Originally posted by @Jesse East:

I just finished two tax books, “Tax Free Wealth” and “Tax Strategies for the Savvy Real Estate Investor”, and both books talk about how to deduct vacation expenses with some planning. However, my tax advisor told me scouting properties does not count as a deduction.

This did refer to a specific trip we took for the day to another city a couple of hours away. We meet with several realtors at about 5 different properties. We schedule these appointments ahead of time and the only reason we took the trip was to look for properties, and that is all we did that day. I feel like based on what I have now read that this mileage at the least should be deductible and most likely lunch as well.

What are your thoughts?

Your tax professional is correct. 

Unless you already own properties in that location you can't deduct expenses to visit there. You're not yet "in business" there in the IRS' eyes. 

If/When you end up buying a property there those business related travel costs get added to the basis of that property- as the IRS looks at basis as all costs to acquire an asset and get it put into service. 

If you own rentals all around the country that may be different and you may be operating on a "national" level so to speak. 

But no you can't write off a trip to somewhere you may  buy rentals-  otherwise people would just take tax deductible vacations every year and view a few rentals.