Writing off expenses incurred before Rental Business

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Hi everyone,
I am wondering if there are guidelines for writing off Rental Property investment related expenses on taxes which were incurred before acquiring a rental property. 

I am looking to buy my first rental property this year under my own name, not an LLC (yet). I understand that once I acquire the rental, and start producing income off of it, that there are various business related expenses I can write off. How about expenses incurred while educating myself and investigating properties (plane tickets, gas mileage, training, meet ups, etc). Would these be able to be written off as well? Thank you!

Originally posted by @Alexander Sadeghi :

Hi everyone,
I am wondering if there are guidelines for writing off Rental Property investment related expenses on taxes which were incurred before acquiring a rental property. 

I am looking to buy my first rental property this year under my own name, not an LLC (yet). I understand that once I acquire the rental, and start producing income off of it, that there are various business related expenses I can write off. How about expenses incurred while educating myself and investigating properties (plane tickets, gas mileage, training, meet ups, etc). Would these be able to be written off as well? Thank you!



I have listed brief summary of travel cost, but all other cost follow the similar rules. 

Travel cost to look at other property

If you travel, but you have not identified the property that you actually want to buy yet and the cost is considered investigating cost. These cost for most of the individual are considered personal in nature( unless you have RE portfolio that is run like a business- see below). If you had identified the property, the cost, the travel cost would be added to the basis of the property and depreciated.

These initial investigatory costs are treated differently for flipping and rentals

1) Flipping: the travel cost to investigate will be treated as a business cost and deducted as ordinary travel cost. This is a schedule C activity if you dont have an entity. Flipping is more than likely will be considered trade or business.

2) Rentals: For this purpose, rental are not considered trade or business, so initial investigatory cost cannot be deducted as travel expenses. this travel expense is not a business expense related to the property you already own until you have identified the  property you want to buy ( once Identified cost are added to the basis as mentioned above). The reason you can't deduct travel expense before identifying a property is you report your every rental activity that you already own on schedule E. The travel expense to investigate another property is not related to the activity that you already own. And you dont have schedule C to deduct the business expense.

This might have changed if your RE portfolio was run like a business, and/or you have a partnership, the partnership would then deduct the travel expense ordinary business expense.

Like I said, it gets complicated really quick. Please talk to your CPA