The TRUTH About Real Estate Travel Time

Introduction

This tutorial provides a comprehensive guide on understanding the implications of travel time related to real estate activities, based on insights from tax expert Jasmine DiLucci. The information is particularly relevant for real estate professionals and investors looking to navigate tax regulations effectively.

Step 1: Understand Travel Time Regulations

• Definition of Travel Time: Travel time refers to the duration spent commuting for business-related activities, which can sometimes be deductible for tax purposes.
• Key Consideration: Not all travel time is deductible. The IRS has specific regulations regarding what qualifies as deductible travel.
• Practical Tip: Keep meticulous records of travel time, including the purpose of the trip, locations, and mileage.

Step 2: Differentiate Between Personal and Business Travel

• Business Travel: Travel specifically for business purposes, such as meeting clients or conducting property inspections, may qualify for deductions.
• Personal Travel: Travel that is primarily personal is generally not deductible, even if it includes some business activities.
• Practical Advice: Clearly document the business purpose of each trip to substantiate any deductions claimed.

Step 3: Track Your Mileage

Mileage Log: Maintain a detailed log of all business-related travel. Include

• Date of travel
• Starting and ending locations
• Purpose of the trip
• Mileage driven
• Tools: Consider using mobile apps or templates to simplify tracking mileage.

Step 4: Understand IRS Rules for Travel Deductions

• Ordinary and Necessary: The IRS requires that travel expenses be both ordinary (common in your industry) and necessary (helpful and appropriate).
• Documentation: Keep receipts for expenses incurred during travel, such as lodging, meals, and transportation.
• Common Pitfalls: Avoid mixing personal and business travel expenses in your records, as this can lead to complications during audits.

Step 5: Utilize Resources and Support

• Free Legal Memo: Download Jasmine’s free legal memo that can be useful during an IRS audit here.
• Community Engagement: Join Jasmine’s free Actual Tax Law Community for workshops and resources on tax-related topics here.
• Continuous Learning: Stay informed about tax laws by following reputable sources and engaging with experienced professionals.

Conclusion

Understanding and correctly applying travel time regulations can help real estate professionals maximize their tax deductions and avoid pitfalls. By documenting travel meticulously, differentiating between personal and business activities, and utilizing available resources, you can navigate the complexities of tax regulations effectively. Consider taking the next step by downloading the legal memo and joining the tax community for further guidance.