Anybody have problems with the IRS when it comes to claiming mileage to/from their rental? I have read pub 587 and it isnt clear. I have a room in my house designated as my office. I don't take the home office deduction but do claim meage to/from rentals.

I too, have a beginning year and ending year mileage. I also have a mileage log on my phone that I keep track of anything that I do for the rentals/business (date, purpose, start and end) for each travel/trip. I save them by month.

Here is what I found:

Driving From and to Home

Most local trips that landlords make for their rental activities start and end at home. Whether driving from home is deductible as an operating expense ­depends on whether you have a home office for your rental activity, and where you drive to.

Landlords Who Have a Home Office

If you have a home office that qualifies as your principal place of business, you can deduct the cost of any trips you make from home to another location for your rental activity. You can get a lot of travel deductions this way. For example, you can deduct the cost of driving from home to your rental property or to the bank.

To deduct the cost of driving to and from your home office, it must qualify as your principal place of business. The rules for the home office deduction are used to determine whether a home office is a person’s principal place of business. ­Under these rules, a home office qualifies if it is the place where you perform management or administrative tasks. Practically any landlord can set up a home office to perform such tasks—but you may not use the office for any other ­purpose.

Landlords Who Don’t Have a Home Office

If you don’t have a home office that qualifies as your principal place of business, your transportation deductions will be limited by the commuting rule.

Commuting expenses are nondeductible personal expenses.

Commuting means driving from where you live to your main or regular place of work for your rental activity. For landlords, this means driving from home to their rental properties or to their outside office (if they have one).

Even if a trip from home has a business purpose—for example, to haul tools or supplies from home to your rental property—it is still considered commuting and is not deductible. (You may, however, deduct the cost of renting a trailer or any other extraordinary expenses you incur to haul the tools or supplies from your home.)

Someday the IRS will have to re-evaluate what it designates as a home office. Back in the day, you would install a business line, have a desk and a fax machine and a filing cabinet in a little room all by yourself.

And the regs say you can't have entertainment in the same room as your office, like a TV.

Nowadays, with laptops and mobile phones and cloud storage, a virtual office is the reality. I conduct "business" all over my house! In the morning it's from my bedroom enjoying my view of the water. In the afternoon it's in my living room, ditto! And I can watch Netflix from anywhere.

Thanks this was all very helpful. Let me pay you guys back now. I paid $60 per year for an app called MileIQ. It tracks EVERYWHERE you go. Then when you feel like it you classify work or personal. I tracked mileage both ways. Me keeping track and then tracking it through IQ. IQ did it way better and I had more miles than I thought. It by far paid for itself.

Back some years ago the IRS and I were at "war". They thought I was dishonest and were playing games with my real estate deductions -- using every loophole on the planet. In short they said, "I wasn't a realtor" and therefore not a "real estate professional", the auditors not knowing the definition of "professional".

So after making them look like fools, they then focused my vehicle deductions.

Since I refused to keep a log that entailed:

1) Date

2) Starting Mileage

3) Distance traveled

4) Person's and address traveled to.

Witness/person seen with their

1) name

2) contact information/phone

5) Reason why I was there

6) Time spent

The IRS only allowed 80% of my vehicle deductions.

Thus having a win they could show to their supervisors.

RobertJ,

Were you claiming the professional status while having a full time w-2 job? I have been wanting to do this but I don't have enough marbles to pull the trigger.

If you have a full-time W2 job, it's much harder to claim you ALSO spend 750 hours managing your real estate empire. I've heard that's a true red flag for the IRS - to have a job and also claim RE Pro.

Our sole income is from rentals, so it's not hard to prove we spend the majority of our time dealing with them - we do! Here's something to help quantify that (this is from the Section 179 rules, but it helps define things overall.)

"Make Sure Your Rental Activities Qualify as a Business

Owning rental property qualifies as a business if you do it to earn a profit and work at it regularly, systematically, and continuously.

I have a home office, but have never taken the deduction. I have no other office for LLing.