Vehicle Interest Expense

I have a rental property located in another state.

I always take the standard mileage deduction for the miles spent driving to check on the property. I also deduct my meals and other travel expenses. My tax preparation software is leading me down a path to deduct a portion of the loan interest on the vehicle. My former tax preparer never asked me about loan interest. We have a family car that I used to drive about 500 miles round trip to check on the rental property twice last year. Can I deduct a portion of the loan interest paid on this vehicle? If so, how is it calculated.

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Reply to
MDinDestin
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No. you're taking mileage therefore, you don't get other auto-related expenses such as gas, maintenance, insurance, depreciation or interest.

Reply to
San Diego CPA

Next question will be; "can I take depreciation also?"

One of my clients wasn't pleased with my answer and went "back" to his previous preparer (who said she was a CPA from Los Angeles btw) who allowed it and the mileage rate. (However I checked the Georgia secretary of state's web site and she was NOT registered as a CPA in the state she "practices". or mis practices. ChEAr$, Harlan Lunsford, EA n LA

Reply to
Harlan Lunsford

"MDinDestin" wrote

If so, it's computed as a percentage based on business miles / total miles.

-- Paul Thomas, CPA snipped-for-privacy@bellsouth.net

Reply to
Paul Thomas, CPA

You are entitled to deduct interest paid on a business vehicle, regardless of which method you choose for vehicle expenses, so long as you are self employed. The authority within the Code to deduct interest related to a trade or business, or a passive activity such as a rental is completely separate from that for vehicle expenses. As with any other deduction of interest, however, you must properly allocate its use proportionally, as mentioned by Mr. Thomas. Tim

Reply to
Tim

Here's what the IRS pub on business expenses says about this: "Parking fees, tolls, interest, and taxes. Parking fees and tolls attributable to use of the automobile for business purposes may be deducted as separate items. Likewise, interest relating to the purchase of the automobile as well as state and local personal property taxes may be deducted as separate items, but only to the extent allowable under section 163 or 164, respectively. Section 163(h)(2)(A) expressly provides that interest is nondeductible personal interest if it is paid or accrued on indebtedness properly allocable to the trade or business of performing services as an employee. ... If the automobile is operated less than

100 percent for business purposes, an allocation is required to determine the business and nonbusiness portion of the taxes and interest deduction allowable."
Reply to
LoTax

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