Managing rental properties often involves frequent local travel. Whether checking on properties, meeting tenants, or buying supplies, these trips can add up in cost. Fortunately, the IRS allows landlords to deduct travel expensesincurred for business purposes, offering significant tax savings. This guide explainshow to deduct travel expenses on taxes, what qualifies as a deductible expense, and how these deductions can reduce your tax liability while keeping your rental business profitable.

Understanding Travel Expense Deductions

Travel expenses refer to costs associated with using your vehicle or public transportation for business-related activities. For landlords, this includes trips needed to manage, maintain, or improve rental properties. Typical deductible travel expenses include:

• Mileage for driving to rental properties
• Trips to purchase supplies or meet vendors
• Travel to attend property-related legal or financial meetings

However, non-deductible expenses include personal travel mixed with business trips or travel from home to your first rental property, unless you have a valid home office per IRS guidelines.

For example, if you drive 20 miles round trip to inspect a property, using the 2025 IRS mileage rate of 70 cents per mile, your deductible expense would be $14.00.

Qualifying for Local Travel Expense Deductions

To qualify for these deductions, ensure that all travel expenses are directly related to your rental business. The IRS requires:

• The trip must be primarily for business purposes. If mixed with personal activities, only the business-related portion is deductible.
• Regular trips for property maintenance or management, such as weekly checks or repairs, are deductible. However, irregular or non-essential travel may not be deductible.
• Maintaining detailed records is crucial. Include the trip date, purpose, miles driven, and retain receipts for any parking fees, tolls, or associated costs.

Calculating Travel Expense Deductions

There are two primary methods to calculate your travel expense deductions:

• Standard mileage rate: In 2025, the rate is 70 cents per mile. Multiply your business miles by this rate to determine your deduction.
• Example: If you drive 2,000 miles annually for property management, your deduction would be $1,400 (2,000 miles x $0.70).
• Actual expense method: This involves calculating a percentage of your total vehicle expenses, corresponding to business use.

Deciding which method to use depends on your specific situation. Consulting with a tax professional can help determine the best choice for your circumstances.

Claiming the Travel Expense Deduction

To claim these deductions, follow IRS guidelines closely. Report your expenses on Schedule E (Form 1040), designed to document rental property income and expenses. Under the “Expenses” section, include:

Mileage or Vehicle-Related Costs

Additional costs like tolls or parking fees, itemized under “Other Expenses”

Ensure documentation includes a mileage log, detailing the date, purpose, starting and ending locations, and total miles driven. Retain receipts for all relevant expenses to support your claims during an audit.

Maximizing Your Savings

The amount you save through travel expense deductions depends on your travel habits and overall expenses. For instance, if you drive 3,000 miles yearly at the 2025 rate, your deductions could total $2,100. In a 24% tax bracket, this reduces your tax liability by $504.

Taking full advantage of these deductions not only lowers your taxable income but also frees cash to reinvest in your rental business.

Understanding how to deduct travel expenses highlights the financial benefits of keeping detailed records and tracking your mileage. By leveraging either the standard mileage rate or actual expense method, and accurately reporting on Schedule E, you can maximize these deductions.

For further support, consult IRS resources or seek advice from a tax professional to ensure compliance with all regulations. Embracing these strategies not only enhances tax efficiency but also contributes to the ongoing success of your rental operations.