How to calculate the tax deduction for trips to maintain the rental property

According to IRS Publication 527, Residential Rental Property:

“You can deduct the ordinary and necessary expenses of traveling away from home if the primary purpose of the trip is to collect rental income or to manage, conserve, or maintain your rental property. You must properly allocate your expenses between rental and nonrental activities. You can’t deduct the cost of traveling away from home if the primary purpose of the trip is to improve the property. The cost of improvements is recovered by taking depreciation.”

The IRS also provides additional guidance for travel expense deductions in Publication 463.

• Purpose of travel must be mainly for business and have a clear business purpose.
• Majority of the travel time must be spent on your rental business rather than leisure.
• Travel expenses must be “ordinary and necessary” for your real estate business but not overdone, such as staying in a 5-star resort versus an Airbnb or VRBO when going out of town.
• Rental activity like showing the property to prospective tenants or doing an inspection is also a deductible travel expense, provided that was the main reason for traveling.
• Traveling to conduct repairs and maintenance is deductible, but traveling to the property to make a capital improvement such as replacing the HVAC or installing a new roof is not a deductible expense.

Some of the common rental property travel expense deductions real estate investors can claim:

• Expenses traveling to and from the airport, such as a taxi or Uber.
• Airfare, train, or bus fare.
• Car rental expenses and associated costs such as parking fees or tolls.
• Travel to a Home Depot or Lowes to shop for materials and supplies to be used for your rental property.
• Traveling to the property to show it to prospective tenants.
• Travel expenses incurred to interview or meet with members of your local real estate team, such as an accountant, attorney, leasing agent, property manager, lender, or general contractor.
• Lodging expenses and 50% of meal and beverage expenses incurred while you are traveling outside of your home market.

Standard Mileage Deduction

The standard mileage deduction is the easiest way to claim an auto deduction when traveling to a rental property in your own market. To calculate the mileage deduction, simply keep track of your miles driven for your rental property business and multiply by the standard mileage rate. 

Mixing Business with Pleasure

Sometimes it’s possible to mix personal and business travel provided that you do it strategically. Generally speaking, as long as at least 50% of your travel days were spent on your rental property business, your trip may still be tax-deductible

Of course, any lodging and meal expenses incurred on non-business days are not tax-deductible as a travel expense, nor are the travel expenses for a spouse, partner, or child unless they accompanied you on the trip for a legitimate business purpose.