Drive Time Increases Odds of Deducting Rental Property Losses
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You own rental property, log your hours, and still fall short of the 750-hour real estate professional test. Meanwhile the drive time to and from your rentals sits on the sideline, uncounted.
The IRS’s own guidance says drive time doesn’t count toward material participation. But that guidance hasn’t been updated in over 20 years, and several Tax Court cases have let real estate professionals count exactly that time — sometimes tipping the scale on losses worth six figures.
In one case, a home-office deduction turned an owner’s commute into business travel and unlocked $126,376 and $151,884 in rental losses across two audited years. In another, reconstructed drive time preserved a $69,531 deduction.