Drive-time increases odds of deducting rental-property losses

October 24, 2018

Your rental properties can provide a valuable tax shelter when you deduct your rental losses against other income. One important step to take if you want to deduct your losses is to pass the tax code’s 750-hour test. It's one of the ways taxpayers get to prove that they are real-estate professionals. Looking for ways to accrue hours? Consider the time you spend driving!

  1. Before the Tax Reform Act of 1986, you could deduct your rental-property losses. Today, to deduct your rental-property losses you have to qualify as a tax-law-defined "real estate professional" and "materially participate" in the properties that caused the losses. Many rental-property owners fail to include their drive-time as rental-property participation time. We'll explain why this can be a costly mistake when you contact us.
  2. When your home office is your principal place of business for your rental properties, your trips from your home to the rentals are considered to be business trips. And this mileage can be counted as rental-property business mileage and applied towards meeting your 750-hour test requirements. You'll get all the details when you contact us. 


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