Purchase of rental property

[oceanlovin'ea]

I have a client from Florida who has been working in California for the past couple of years. He got married in November to a lady who is a California resident. She will work for 2 more years and then retire. He is drawing social security now but still working (well, he was....job just ended) He will work part-time.

They want to retire in Prescott, AZ. So they made several trips out there to look for property to buy for when they retire in 2 years. They purchased a mobile home in a retirement community. They are renting this property until they retire.

They asked about deducting their expenses to go to Prescott and locate a piece of property and purchasing it. They also inquired about their trips to Prescott to take care of the property.

I know that the trips they make to maintain and take care of their property are deductible. But what about the trips they took to find the property to rent? I think they made 3 trips to Prescott to look for a place and the 4th trip was to purchase the property.

Is this a deductible expense?

Linda F

[JG EA]

I think that Investment expense can be deductible just as business expense could be, but it is on A subject to 2%. It would follow the same rules as business expenses. If over 50% of the trip is for investment (a log would be great) then the travel expenses are deductible. Then the part of expenses for investment looking, acquiring, etc.would be also.

However, I would be more careful and have the client document carefully because this type of travel is very prone to personal activity.

[oceanlovin'ea]

Documentation

They do have documentation. They gave me a list of dates and expenses. If I asked them to show receipts, they would be able to.

This man is used to having to turn in expenses for reimbursement and keeps very detailed records for his business expenses. So I am sure that they have documentation for the expenses.