Deducting your rental property travel expenses can save you a lot of money on your taxes. Many real estate investors can write off almost all travel-related costs associated with their rental properties. This includes mileage, meals, lodging, and other related expenses. By keeping track of all your deductions, you can reduce your taxable income and save money.

Key takeaways

• Rental property travel expenses are a deduction that many real estate investors can claim to reduce taxable net income.
• Common travel expense deductions for rental property include auto, travel expenses to visit a rental property in another location, and meals and lodging.
• Schedule E, Form 1040, is used to report rental property travel expenses and income and operating expenses at the end of each year.

What are rental property travel expenses? 

Rental property owners can deduct many travel expenses. These include mileage, meals, lodging, and other travel-related costs:

• Mileage is a typical travel expense that can be deducted. For example, if you’re traveling to and from your rental property, you can deduct the mileage from your taxes. This includes the cost of gas and wear and tear on your vehicle.
• Meals are another typical travel expense that can be deducted. This includes the cost of restaurants and other food-related expenses.
• Lodging is another typical travel expense that can be deducted. This includes the cost of hotels, motels, and other lodging expenses.
• Other travel expenses that can be deducted include the cost of transportation, baggage fees, and tips. As a rule of thumb, real estate investors can deduct these costs from the rental income collected. 

Keeping track of all your rental property travel expenses can help to reduce your taxable income and save money.

How to deduct rental property travel expenses from your taxes 

If you’re a real estate investor, you can deduct your travel expenses from your taxable income. 

When deducting travel expenses, keep track of all your receipts and expenses. This will help you stay organized and ensure that you can deduct all of your eligible expenses. 

Simply fill out Schedule E, Form 1040, and attach it to your tax return to deduct your travel expenses. Keep accurate records of all your travel expenses so you can properly deduct them from your taxes. 

What is Schedule E? 

Real estate investors use Schedule E to report rental property income and expenses. 

The Schedule E instructions booklet provides guidance on how to complete the form, including how to calculate your total rent receipts and deductible expenses. Schedule E is also used to report income or loss from partnerships, S corporations, estates, trusts, and real estate investment trusts (REITs). 

If you have any questions about how to complete Schedule E, consult with a qualified tax professional or visit the Stessa Tax Center for helpful blog posts detailing tax preparation best practices, deduction strategies, and a suite of tax resources created in partnership with The Real Estate CPA.

How to keep track of all your deductions to save money on your taxes 

Rental property owners know that there are many tax deductions available to them. However, keeping track of all of the different deductions can be a challenge. There are several methods and systems that landlords can use to keep track of their rental property tax deductions.

One popular method is to use a spreadsheet to track all of your expenses related to the property. This can be a helpful way to see at a glance what expenses are eligible for deduction and how much you can deduct each year. 

Another option is to use special software designed specifically for tracking rental property tax deductions. This type of software can be particularly helpful if you own multiple properties, as it can help you track deductions across all of your properties in one place. 

For example, Stessa provides rental property software for landlords to help them maximize profits through smart money management, automatic income and expense tracking, personalized reporting, and much more.  

After signing up for a free Stessa account and entering property, bank, and mortgage account information, income and expense transactions are automatically synced. You can begin monitoring your rental property investments from a single, comprehensive online dashboard. 

Rental property financial management software from Stessa can be used with an unlimited number of real estate portfolios, and over 200,000 investors are already using Stessa to track and optimize their properties.

With Stessa, you also get access to:

• Automated accounting tools: Replace cumbersome spreadsheets and easily track income and expenses. Stessa automates the process of categorizing transactions, reducing time spent on manual data entry.
• Manual expense tracking: Enjoy precise record-keeping of all property-related expenses, from maintenance costs to insurance fees, for a comprehensive view of property expenditures.
• One-click smart receipt scanning: Quickly and accurately add expense receipts to your property records, reducing the risk of losing or misplacing vital receipts.
• Mileage tracking: Track all travel related to your property management efforts for accurate expense reporting. This feature is particularly beneficial for tax purposes, as you can sometimes deduct these costs from taxable income.
• Automated bank feeds: Connect unlimited bank accounts for real-time income and expense tracking so you can manage your cash flow effectively and stay on top of your financial situation.
• Centralized dashboard with key metrics and complete chart history: Access a clear real-time overview of your property performance. The dashboard displays critical metrics and historical data in an intuitive, easy-to-understand format.
• Rental applications: Manage tenant applications efficiently and effectively by streamlining the process of publishing vacancies, and collecting and reviewing applications.
• Tenant screening: Use a proprietary approach with RentPrep for comprehensive tenant checks, including a full credit report, background check, and more. For additional screening, landlords can add income verification or judgment and liens, increasing the odds of selecting reliable tenants.
• Online rent collection: Automate your rent collection process, including payment reminders and late fees, reducing the likelihood of missed or late payments.
• Landlord banking: Open FDIC-insured bank accounts and enjoy a more efficient way to manage your property-related finances. You can also earn more than 10x the national average interest rate on every dollar of deposits.*
• Mobile app (iOS and Android): Utilize Stessa’s mobile app to help you manage your properties on the go. You can categorize transactions, check key metrics, scan receipts, and view your portfolio from almost anywhere, anytime.
• eSigning: Simplify lease signing and other document execution with integrated eSignature capabilities. This feature makes it easier for landlords and tenants to sign important documents, reducing the need for in-person meetings.
• Tax center: Tax time is a cinch thanks to the Stessa Tax Package feature. It helps aggregate your transactions and sends you personalized tax reports via email with digital copies of all of your receipts packaged into a single ZIP file.

Whichever method you choose, staying on top of your rental property tax deductions is essential to maintaining a healthy bottom line.

Common mistakes investors make when deducting rental property travel expenses

Many real estate investors make the mistake of thinking that any travel expense related to their rental property is deductible. However, there are a few key things to keep in mind when it comes to deducting rental property travel expenses. 

First, the Internal Revenue Service (IRS) only allows you to deduct expenses that are considered “necessary and ordinary.” This means that you can’t deduct lavish expenses, such as first-class airfare or stays at luxury hotels. 

Secondly, you can only deduct travel expenses directly related to your rental property. For example, if you drive to your rental property to perform repairs, you can deduct the cost of gas. However, if you meet up with friends for lunch after, that expense would not be deductible. 

Finally, you can only deduct travel expenses that you actually incur. This means that if you drive your own car, you can only deduct the actual cost of gas, not a car rental cost. 

By keeping these 3 things in mind, you can ensure that you’re taking all the proper deductions for your rental property travel expenses.

Topic No. 511 Business Travel Expenses from the IRS provides details on deductible travel expenses real estate investors can claim and common items that can and can’t be deducted.

Tips for claiming expenses

To claim these expenses, keep accurate records of all transactions related to the rental property. This includes receipts, invoices, and bank statements. In addition, you will need to keep track of the dates the expenses were incurred and the amount paid. 

Final thoughts

Rental property travel expenses can be a great way to save money on your taxes. By keeping track of all your deductions, you can ensure that you take advantage of every possible opportunity to reduce your taxable income. 

For more information on rental property tax deductions, investors may wish to review the instructions for IRS Schedule E (Form 1040), speak with a qualified accountant or tax advisor, and visit the Stessa Tax Center for a free tax guide and top tax deduction tips, including travel expenses.

*Stessa is not a bank. Stessa is a financial technology company.Terms and conditions, features and pricing are subject to change. This article, and the Stessa Blog in general, is intended for informational and educational purposes only, and is not investment, tax, financial planning, financial, legal, or real estate advice.