If I’m planning to buy real estate out of state, are my trips to look at properties deductible?
heart_and_troll asked:
In accordance with the usual IRS travel/meals/ent rules, of course. Are these deductible this year even if I buy next year? What if circumstances change and I don’t buy at all? I’ve heard that if I don’t buy, not deductible; if I do, must be added to basis, not deducted. On the other hand, another person doing the same thing was told by his accountant to form an ‘investment’ corp. and write off all his real estate searching travel within that corp. (hopefully, he is not planning to tell this guy to buy the real estate in the corp, but if he isn’t then the tax write offs for the corp don’t seem that legit.). Thoughts? Thanks.
Sorry, this is for investment purposes, not for a personal residence.
Not pers residence, not vacation home. Rental property.
Yes, I already have one investment property, and the reason for buying elsewhere is because I believe, and research seems to back me up, that better value and better price appreciation can be had there vs here (think an expensive bubble area where rent positive rentals are hard to achieve, vs a midwestern locale where stuff is cheap and rent positive is the norm).
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In accordance with the usual IRS travel/meals/ent rules, of course. Are these deductible this year even if I buy next year? What if circumstances change and I don’t buy at all? I’ve heard that if I don’t buy, not deductible; if I do, must be added to basis, not deducted. On the other hand, another person doing the same thing was told by his accountant to form an ‘investment’ corp. and write off all his real estate searching travel within that corp. (hopefully, he is not planning to tell this guy to buy the real estate in the corp, but if he isn’t then the tax write offs for the corp don’t seem that legit.). Thoughts? Thanks.
Sorry, this is for investment purposes, not for a personal residence.
Not pers residence, not vacation home. Rental property.
Yes, I already have one investment property, and the reason for buying elsewhere is because I believe, and research seems to back me up, that better value and better price appreciation can be had there vs here (think an expensive bubble area where rent positive rentals are hard to achieve, vs a midwestern locale where stuff is cheap and rent positive is the norm).
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February 28th, 2010 at 7:59 pm
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If it is for investment property perhaps but not for a personal residence.
March 2nd, 2010 at 12:04 am
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You can deduct ordinary and necessary travel expenses to manage or maintain investment property that you already own. I don’t know just where you’d deduct the type of trip you are describing on a personal return, unless you were in the business of investing in property.
You would want to have a very good explanation ready for an IRS auditor as to why you wanted to buy investment property somewhere far from where you live – that it was truly for investment reasons, not personal.
March 3rd, 2010 at 9:27 pm
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You can deduct travel costs for properties that you already own, not for properties you do not yet own. The costs must be related to the generation of rental income such as maintenance and inspection, meeting prospective tenants, handling leases, evictions, etc.
March 4th, 2010 at 3:59 am
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If it is for investment property