Ask The Guys: Can I Deduct Travel Expenses?

Here’s a question we got from Sue in California (thanks Sue!):

If we have a property manager, can we write off travel costs from CA to Memphis for us to visit the property?  If so, how many times a year can we visit and write off the costs?

Since we aren’t tax gurus, we tossed the question to our good friend, CPA Tom Wheelwright, who answers:

The rule for any business expense is that in order for it to be deductible, it must have:

  1. a business purpose;
  2. be ordinary in the course of your business; and
  3. be necessary

If you are visiting the property to check up on it and the manager, clearly this will be a business purpose.

If the amount of the expense is reasonable compared to the income you make from the property, then you should meet the “ordinary” test.

If visiting the property will help you make more money from the property (meeting with the property manager, coming up with new ideas to increase the rent, etc.), then you should meet the “necessary” test.

Each time you visit, or incur any expense for that matter, you must meet all three of these tests.  They are somewhat subjective, so be wise in how you document your expenses and the activities you pursue while you are visiting the property and/or the property manager.

So there you have it!  From the brain of Tom to our blog.

Tom Wheelwright is a Certified Public Accountant and Robert Kiyosaki’s Rich Dad Advisor® for tax planning.  Tom is also joining The Real Estate Guys™ as a faculty member for our 1oth Annual Investor Summit at Sea™ he will be teaching, talking tax and hanging with all of our Summiteers – including our very special guests Robert and Kim Kiyosaki LIVE and IN PERSON for the ENTIRE week!  Plus, Tom is a frequent guest on The Real Estate Guys™ radio show where he shares valuable pearls of tax wisdomClick here to hear the latest episode featuring Tom.