Travel Expenses and Tax Deductions

7 Replies

Hi Everyone,

New investor here. Just bought a SFR rental in Mesa, AZ and I am already doing some tax planning. I live in California, so I plan to drive to my rental property and I had a question regarding travel expenses and tax deductions.

For gas, do I make the purchase with the rental property's account/debit card and just deduct it on the Schedule E? Do I make the gas purchase on my personal credit card, reimburse myself from the property's account, and then deduct it on the Schedule E? Do I make the purchase on my personal credit card, don't reimburse myself, then just deduct the expense on the Schedule E?

I know I am going to use the standard mileage deduction, but I was just wondering how I should make the actual gas expenses when I travel.

Thanks!

@Mike Leng I understand that, but it doesn't change the fact that I will still incur these expenses.  I am more wondering about how to pay for these expenses before tax season.  

Do I pay for gas using the property's bank account/debit card, knowing that I am going to take the deduction later? Do I make the gas purchase on my personal credit card, reimburse myself from the property's account, and then deduct it on Schedule E? Do I make the purchase on my personal credit card, don't reimburse myself, then just deduct the expense on the Schedule E?

Kerns, when you drive your own car for business, you write down the miles driven and at the end of the trip, calculate the reimbursement based on IRS published rate (56 cents per mile, I believe). That's the only reimbursement you can claim. While you are on the trip, you pay out of your own pocket for gas, window washer fluid, or whatever. If you are unlucky, you may even get a flat tire and have to pay to fix it using your own money.  All of that is on your own and should not be put on your company card. 

One more thing regarding cash flow: at the end of the trip, you should file an expense report, seeking g reimbursement from the LLC. Then you withdraw the reimbursement amount from your LLC bank account and put it in your personal bank account. So you the "employee" is made whole immediately, and the LLC just incurred an expense, no different if it had paid a lawn mower guy.