I need some guidance on what I can write off relative to a business vehicle for my rental business.. Can you write off more than just mileage to & from your rentals/store for repairs. For me, that wouldn’t amount to much, so not really worth the hassle of recording mileage in a log. Can I write off the purchase of the Vehicle itself, routine maintenance, etc. or just a % given the Vehicle will be used for both personal & business use. I have an LLC, not entirely sure if that’s relevant or not. Thanks in advance.

Hi Bill,

I'm not a CPA, so take this advice with a grain of salt based on what my CPA tells me.

You can choose to do vehicles one of two ways: mileage or depreciation & expense tracking. The general rule of thumb is older vehicles save you more by using mileage, whereas newer vehicles save you more by itemizing expenses and depreciation. It is simpler from an accounting perspective to do mileage, obviously, since you're only keeping track of one thing: odometer at the start of business and odometer at the end of business. It's also easier if your vehicle is used exclusively for business since you're not allowed to count mileage spent doing personal business.

My understanding is having an LLC does not impact your situation since it is a "pass thru" entity: everything from your business passes thru it and shows up on your return, which avoids corporate taxation.

Based on what you have said your usage is, it may not be worth the hassle of maintaining a mileage log. Business mileage must be for business purposes: in addition to the ones you mentioned you can also log miles for showings, lease signings, maintenance visits, etc.

There are some good apps for smart phones that record mileage automatically when you tell it to start and stop logging. Might check into one of those.

The standard rate for 2018 mileage is 54.5 cents. So if you drive 5000 miles for your business, you get to deduct a little more than $2,500 off your taxable income, which if you are in a 25% tax bracket would save you around $600-$700 in taxes paid.

At the end of the day, I find that logging miles saves me a few hundred bucks a year, and the work involved with a mileage log is minimal. You may do better if you use your vehicle more than I do. Up to you to decide if that's worth your time and effort.

Best wishes.

SAME DISCLAIMER AS SID'S:

We have the company pay for the car - all repairs, regular maintenance,insurance, inspections, etc. I used to only pay cash for cars but my accountant had me change that so the company also pay for the financing.

I have two companies and each has a car and absorbs all of it's expenses.

This is a much better deal for us since the mileage on both cars wouldn't amount to much.

I wanted to add, my gasoline bill was 8.75 cents a mile this year.

There is a great advantage to using an old car just for rentals.

Note that there is something non-intuitive about this... You can't write off mileage from your home to your rentals (for repairs or showings or whatever). From your home to your rentals is considered by the IRS to be just like driving to a normal day job (which, again, you don't get to deduct).

You CAN do it for miles from your OFFICE to your rentals (because the drive from your home to your office is considered the non-deductible/normal mileage and then from your office to the rentals is considered deductible). However, you can't just go "Well, I have a home office, so then I can do it."

I'm sure there are tricks around it. But, by default, you can't just include miles from your home to your rentals, sorry.

- John...

If you drive from an office to a business meeting it is tax deductible. If you have a qualifying home office then your mileage is deductible.

When I worked for corporate and worked from home a few days a week and traveled from my home to business meetings that mileage was tax deductible. What I couldn't do was was submit my mileage for corporate reimbursement.

NC Investor is right. If your home is your primary place of business and you have a qualifying home office, you can deduct miles to your rentals.

It is not considered "commuting" (which is never deductible) because you do not regularly commute anywhere.

Found this:

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.)