To use the standard mileage rate, you must use it in the first year you use your vehicle for business purposes, otherwise you can only use the actual expense method. The sole actual expenses you can deduct under this method, in addition to the mileage, are parking fees, tolls, interest on a car loan, and personal property tax on the vehicle. You drive a total of 10,000 miles in 2023. The Internal Revenue Service (IRS) has updated the optional standard mileage rate in 2023 to 65.5 cents per mile for business travel. Simply take the number of miles you drove for business and multiply it by the standard mileage rate to get your deduction. The standard mileage rate is the simplest way to deduct local travel expenses because it requires the least amount of tracking. Use an automatic mileage tracking app like MileIQ in tandem with Stessa’s mileage expense feature to make sure you’re not missing any deductible miles. Remembering to log the trip each time you drive somewhere for business can be a challenge. There are usually two ways you can deduct these trips:īoth methods require you to keep an IRS-compliant mileage log that contains the following: If you established a home office, these miles are considered business miles and are tax deductible within your “tax home.” Your “tax home” is considered the geographic location (that is, the city or locality) where you have an established rental business that functions as your place of business. You might also travel to the bank, the hardware store, or to meet with your broker, your attorney, and so on. Most rental property owners routinely travel to and from rental properties located within driving distance. While most of these activities are indeed ordinary and necessary, you must understand the rules for deducting travel expenses. Necessary means it is helpful and appropriate for the trade or business.Īs a real estate investor, you’ll likely travel to and from your rental properties, other business locations, new markets, and education related events. Ordinary means it is common and accepted within the trade or business. In general, business travel expenses must be considered both “ordinary and necessary” to be tax-deductible.
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