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Itemized Deductions Schedule-A

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Old 04-05-2008, 11:06 AM
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Travel expenses for real property purchase

If you travel out of state for the purpose of finding real property to invest in and hold onto, can you deduct your travel, meals, and other related expenses, and if so, where would you. I'm a CPA, but having only been preparing tax returns just recently, and I'm having trouble finding guidance on this. A client has family in another state, and a family member suggested he buy property in that state for investment purposes because there were some good deals to be found. He made several trips back there and purchased 2 parcels of land - one is vacant land and the other has a home on it. He wants to sell the vacant land for a profit. He may rent out the home - he's undecided there. Any guidance you can offer would be appreciated.

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Old 05-07-2008, 05:08 PM
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The best and safest strategy is to deduct these expenses only after the rental property has been purchased.

The deductible travel expenses would include the travel expenses to fly to the rental property destination, along with the lodging, meals and any incidental expenses incurred directly related to the rental property only! The Rental property activity is considered an activity that is involves the production of the income and so any travel expenses connected to this particular activity would be deductible.

For travel expenses related to the acquisition of land, I would not deduct these as it is not directly involved in the production of income!

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