Deducting Landlord Car Expenses

The cost of driving your car or other vehicle for your rental property business is tax-deductible as long as the travel is ordinary and necessary for your rental activities. "Ordinary and necessary" means that the expenses must be common, helpful, and appropriate for managing your rental properties.

It's important to note that you can deduct car expenses only when your rental activity qualifies as a business (not just an investment) for tax purposes. If you actively manage your properties, collect rent, handle maintenance, and deal with tenants regularly, you likely qualify as conducting a business.

What Trips Can You Deduct as a Landlord?

You can deduct local trips made specifically for your rental business, such as trips to:

• your rental properties for inspections, maintenance, or tenant meetings
• your home office (if it qualifies as your principal place of business)
• meetings with tenants, contractors, suppliers, attorneys, accountants, or real estate professionals
• the bank for rental property business
• hardware stores for property supplies and materials
• the dump to dispose of property waste, and
• educational classes related to landlording.

Moreover, you don't have to do all the driving yourself to get an expense deduction. You can treat the use of your car by another person as deductible business use if that use is directly connected with your business. (See IRS Publication 463, Travel, Gift, and Car Expenses.)

Driving to and From Home: If You Have a Qualifying Home Office

Having a home office that serves as your principal place of business dramatically increases your deduction opportunities. With a qualifying home office, every trip from home to rental properties or other business locations is fully deductible.

To deduct the cost of driving to and from your home office, it must meet the IRS's requirements of being your principal place of business, including that it's:

• used exclusively for rental business administrative tasks
• used regularly (not just occasionally), and
• is the only fixed location where you conduct substantial rental business administration.

For example, your home office might qualify as your principal place of business if it's the only location from which you take care of bookkeeping, scheduling, communicating with tenants, and drafting of landlord-tenant-related documents.

(See IRS Publication 587, Business Use of Your Home (Including by Daycare Providers).)

What to Do If You're a Landlord Without a Home Office

If you don't have a home office that qualifies as your principal place of business, your transportation deductions will be limited by whether the IRS regards your travel as commuting. "Commuting" means driving from where you live to your main or regular place of work for your rental activity. For landlords, this means driving from home to their rental properties or to their outside office (if they have one). Commuting expenses are nondeductible personal expenses.

Even when a trip from home has a business purpose—for example, to haul tools or supplies from home to your rental property—it's still considered commuting and is not deductible. (You may, however, deduct the cost of renting a trailer or any other extraordinary expenses you incur to haul the tools or supplies from your home.)

Once you arrive at your rental office or rental property, you may deduct trips to other rental-related locations—just not trips back home. IRS Publication 463 provides more detail—including an infographic—about what might be considered commuting versus a deductible transportation expense.

How Much Can Landlords Deduct for Car-Related Expenses?

If you drive a car, SUV, van, pickup, or panel truck for your rental activity (as most landlords do), you have two main options for deducting your vehicle expenses.

Option 1: Standard Mileage Rate (Easier)

For 2025, the IRS standard mileage rate is 70 cents per mile for business use. Simply multiply your business miles by $0.70 to arrive at the deduction amount.

Example: If you drove 5,000 business miles in 2025, your deduction would be 5,000 × $0.70 = $3,500.

Many landlords prefer the standard mileage rate method because it:

• requires only simple record-keeping (just track miles)
• avoids the need to save gas receipts or maintenance records, and
• covers gas, oil, repairs, insurance, and depreciation all in one straightforward rate.

Option 2: Actual Expense Method (More Complicated, but Often Larger Deduction)

Instead of using the standard mileage rate, you can deduct the actual costs of operating your vehicle for business purposes. Although it requires more record keeping, you'll often get a larger deduction than you would using the standard mileage rate.

Deductible expenses include:

• gas and oil
• repairs and maintenance
• insurance premiums
• registration fees
• depreciation, and
• lease payments.

If you have a vehicle dedicated solely to your business, all of these expenses can be deducted. On the other hand, for example, if you use your car 30% of the time for business, you can deduct only 30% of all vehicle expenses. This means that if you don't drive many miles each year for your rental activity, the potential additional deductions you get from using the actual expense method might not be worth the more involved recordkeeping.

Don't Switch Methods Midyear

You must choose one method for the entire tax year and stick with it. In some situations, you can switch from using the actual expenses method to the standard mileage method, but there are restrictions if you've claimed depreciation. If you're considering switching, it's a good idea to consult with a tax professional.

Essential Recordkeeping Requirements for Landlord Transportation Expenses

In the face of IRS scrutiny, detailed records will be one of your best defenses if you're faced with an audit. It's a good idea to include the following in your records:

• Mileage logs showing date, destination, business purpose, and odometer readings.
• Receipts for all actual expenses (if using actual expense method).
• Beginning and ending odometer readings for the tax year.
• Evidence of—or at least notes on—the business purpose for each trip.

A way to simplify your recordkeeping is to use a smartphone app or simple logbook to track mileage in real-time. The best practice—and the one recommended by the IRS—is to record the elements of an expense "at or near the time of the expense," as reconstructing your records after the fact often leads to errors. The IRS considers weekly logs to be timely.

Common Mistakes to Avoid

You can reduce your audit risk and maximize your legitimate deductions by avoiding these common mistakes:

• Mixing personal and business use without proper allocation. Track and separate your business and personal miles. Very few vehicles are used 100% of the time for business. If you try to deduct mileage that you've driven for personal errands, you might be subject to penalties.
• Failing to maintain contemporaneous records. As discussed above, keep your records in as close to real time as possible. Document the date, destination, business purpose, and odometer reading for every business trip you take.
• Deducting commuting expenses without a qualifying home office. You can't deduct your travel on rental business unless your home office qualifies as your principal place of business.
• Not filing Form 4562 when required. If you claim vehicle expense deductions, you must complete and attach Form 4562, Part V, to your tax return. If you forget to file it, you might not be allowed to take your deductions even if your expenses are legitimate.
• Switching your method of tracking deductions without understanding restrictions. When you use actual expenses, you might not be able to switch to using standard mileage. Before you decide which method to use—and certainly before you make a switch—you'll want to talk with a tax professional.

Getting Professional Help

Vehicle expense deductions involve complex rules that change frequently. Consider consulting a tax professional if you:

• own multiple rental properties
• use vehicles extensively for business
• are considering purchasing business vehicles
• want to switch the method you use to calculate deductions
• are subject to an IRS audit, or
• want to optimize your overall tax strategy.

With proper planning, documentation, and understanding of current tax laws, landlords can legitimately deduct their vehicle expenses while staying fully compliant with IRS requirements. The investment in proper recordkeeping and professional guidance often pays for itself many times over in tax savings. Landlords might also consider checking out Nolo's book Every Landlord's Tax Deduction Guide for more tips and advice.