I traveled to my out-of-state rental property to be on-site when a contractor made improvements ( installed new flooring). I also performed minor miscellaneous maintenance while there.
How do I deduct the travel expenses (mileage, tolls and food)?
Can I deduct them as regular expenses or do they get lumped in with the flooring costs which are added as a depreciable asset?
If the main purpose of your trip is to manage your rental property, then you can deduct these travel expenses as rental expenses. You deduct them as travel expenses and do not lump with the cost of your improvements.
Need a little more clarification please because I'm confused by a statement about travel expenses in Pub 527, as given below, which seems to exclude travel expense deductions when the primary purpose of the travel is for improvements. Are you saying that the travel is still a deductible expense on the basis that I was 'managing' the property by being present during the renovations?
Page 4 of Publication 527
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
. TheYou are correct.
If your trip was strictly to improve the property then it would not be deductible. Just like the improvements would not be expensed but capitalized to be depreciated.
You mentioned that the purpose of the trip was two-fold: to improve the property and to perform certain maintenance work. In this case. I would recommend splitting the cost of the trip in 2 parts (maybe according to the time spent on each task). The portion related to the improvement will be added to the cost of improvement to be capitalized and depreciated, the other portion to be expensed as travel expense.