Travel costs when purchasing a rental property but property not purchased.

Moderator: Third time trying to post this question.
How do you handle travel and related expenses or a taxpayer with multiple Schedule E rentals which are incurred looking for an additional
property to purchase, but no purchase is made?
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
On 3/28/2017 7:09 AM, Taxed and Spent wrote:

I believe the answer is that these expenses are not a deductible expense until such time there is a property found and made available to rent. At that time the expenses would be capitalized against that property (added to cost basis). As far as the IRS is concerned, you are just looking to buy another home until you can show otherwise.
As I mentioned in another thread this month, I remembered that rental property being a passive activity does not allow for expensing start-up costs. That rule requires an active trade or business.
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
On 3/29/2017 9:29 PM, Alan wrote:

I think I saw that after I posted my question. In this case, the real estate activity rises to the level of an active trade or business.
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
On 4/3/17 12:13 PM, Taxed and Spent wrote:

Okay. I just hope you understand when real estate activity rises to the level of a trade or business. So... you can read about that subject in the following article from the Tax Advisor. https://goo.gl/GkXhEZ
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
On 4/3/2017 1:42 PM, Alan wrote:

Yes, I do. I did my own extensive research on this in the past - I wish I had that article back then, although I had others.
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
On 4/3/2017 1:42 PM, Alan wrote:

So, if this is an activity of a Real Estate Professional, which rises to the level of a trade or business, looking for new property to acquire is not a start up activity. So, such costs can be expensed? And if all the properties are Schedule E properties, where would such expenses go on the tax return?
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
On 4/4/17 1:05 PM, Taxed and Spent wrote:

1. Looking for new property in a new market does generate start-up costs in the same manner that the owner of a bakery looking to open another store in a neighboring city generates start-up costs. 2. When you are renting property, you do not have a deductible expense until the property is available for rent. 3. You would need to keep track of the expenses you incur prior to making the property you buy available for rent. Then you can write off them off under Section 195 or use the 180 month rule. 4. If you never buy the property, then you just incurred a nondeductible personal expense.
See the replies in the 3/13 thread on this subject.
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

BeanSmart.com is a site by and for consumers of financial services and advice. We are not affiliated with any of the banks, financial services or software manufacturers discussed here. All logos and trade names are the property of their respective owners.

Tax and financial advice you come across on this site is freely given by your peers and professionals on their own time and out of the kindness of their hearts. We can guarantee neither accuracy of such advice nor its applicability for your situation. Simply put, you are fully responsible for the results of using information from this site in real life situations.