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New Member
posted Nov 5, 2023 9:59:28 AM

Should I deduct or capitalize/depreciate travel expenses (flight & rental car) incurred to travel to a rental property to renovate a rental property kitchen?

The cost of the travel expenses were around $2,200 (flight & rental car) and the cost of the kitchen renovation were around $10,000.

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3 Replies
Level 15
Nov 5, 2023 10:07:37 AM

You can take depreciation deductions on the kitchen renovation, since it is an improvement, but the cost of travel is not deductible if the primary purpose of your trip was for the improvement (rather than repairs or maintenance).

 

See https://www.irs.gov/publications/p527#en_US_2022_publink1000218997

 

Travel expenses.

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.

 

New Member
Nov 5, 2023 10:14:55 AM

Ok, so if I understand correctly, I can't deduct the travel expenses in the current year.  Instead, I need to add the travel expenses to the kitchen renovation expenses and capitalize them together and depreciate that amount in total.  Is that correct?  

Level 15
Nov 5, 2023 10:32:00 AM

Yes, if the travel to the property was ordinary and necessary in order to effect the improvement (kitchen renovation), then the expenses are added to the basis of the cost of the improvement.