Travel expenses for an out-of-state rental
"While the question is very localized, I'll answer about the general principle. My main question is with how far away it is (over 1000 miles), how do   I quantify the travel expenses? Generally, ""necessary and ordinary"" expenses are deductible. This is true for business and also true for rentals. But what is necessary and what is ordinary? Is it ordinary that a landlord will manage the property 1000 miles away by himself on a daily basis? Is it ordinary for people to drive 1000 miles every week? I'd say ""no"" to both. I'd say it would be cheaper for you to hire a local property manager, thus the travel expense would not be necessary. I would say it would be cheaper to fly (although I don't know if its true to the specific situation of the OP, but as I said - its too localized to deal with) rather than drive from Texas to Colorado. If the OP thinks that driving a thousand miles is indeed ordinary and necessary he'll have to justify it to the IRS examiner, as I'm sure it will be examined. 2 trips to the property a year will be a nearly 100% write-off (2000   miles, hotels, etc). From what I understood (and that is what I've been told by my CPA), IRS generally allows 1 (one) trip per year per property. If there's an exceptional situation - be prepared to justify it. Also, keep all the receipts (like gas, hotel, etc.... If you claim mileage but in reality you took a flight - you'll get hit hard by the IRS when audited). Also while I'm up there am I allowed to mix business with pleasure? You cannot deduct personal (""pleasure"") expenses, at all. If the trip is mainly business, but you go out at the evening instead of staying at the hotel - that's fine. But if the trip is ""business"" trip where you spend a couple of hours at your property and then go around having fun for two days - the whole trip may be disallowed. If there's a reasonable portion dedicated to your business/rental, and the rest is pleasure - you'll have to split some of the costs and only deduct the portion attributed to the business activities. You'll have to analyze your specific situation, and see where it falls. Don't stretch the limits too much, it will cost you more on the long run after all the audits and penalties. Can I also write off all travel involved in the purchase of the   property? Although, again, the ""necessary and ordinary"" justification of such a trip is arguable, lets assume it is necessary and ordinary and generally justified. It is reasonable to expect you to go and see the property with your own eyes before the closing (IMHO, of course, I'm not an authority). Such an expense can be either business or investment expense. If its a business expense - its deductible on schedule C. If its an investment expense (if you do buy the property), its added to the cost of the property (capitalized). I'm not a tax adviser or a tax professional, and this is not a tax advice. This answer was not written or intended to be used, and cannot be used, for the purpose of avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code. You should seek a professional consultation with a CPA/Attorney(tax) licensed in your State(s) or a Federally licensed Enrolled Agent (EA)."
By process, I assume you mean the financial process. Financially, this doesn't look any different to me than buying an empty lot to build a rental unit, with the added expense (potentially significant) of doing the tear-down. Given your lack of experience and capital, I would be very hesitant to jump in like this. You are going to have to spend a lot of time managing the build process, or pay someone else to do it for you. And expect everything to take twice as long and cost twice as much as you expect. If you really want to get into the landlord business, I would suggest starting with a structurally sound building that needs some renovation work and start there. One you have that up and running, you can use the cash flow and equity to finance something more aggressive. If you still think you want to do this, the first thing to do is figure out if the financials make sense. How much will it cost to do the tear-down and rebuild, plus the typical rental expenses:ongoing maintenance, taxes, insurance, vacancy rates and compare that to the expected rental rates in the area to see how long it will take to 1) achieve a positive cash flow, and 2) break even. There are a lot of good questions on this site related to rentals that go into much more detail about how to approach this. "I've lived this decision, and from my ""anecdata"": do #3 I have been car-free since 2011 in a large United States city.  I was one month into a new job on a rail line out in the suburbs, and facing a $3000 bill to pass state inspection (the brakes plus the emissions system).  I live downtown.  I use a combination of transit, a carshare service, and 1-2 day rentals from full service car rental businesses (who have desks at several downtown hotels walking distance from my house).  I have not had a car insurance policy since 2011; the carshare includes this and I pay $15 per day for SLI from full service rentals.   I routinely ask insurance salesmen to run a quote for a ""named non-owner"" policy, and would pull the trigger if the premium cost was $300/6 months, to replace the $15/day SLI.  It's always quoted higher.   In general, our trips have a marginal cost of $40-100.  Sure, this can be somewhat discouraging.  But we do it for shopping at a warehouse club, visiting parents and friends in the suburbs.  Not every weekend, but pretty close.   But with use of the various services ~1/weekend, it's come out to $2600 per year.  I was in at least $3200 per year operating the car and often more, so there is room for unexpected trips or the occasional taxi ride in cash flow, not to mention the capital cost: I ground the blue book value of the car from $19000 down to $3600 in 11 years.   Summary:  Pull the trigger, do it :D" Your desire to travel before starting work is smart and something you should do. There are very few opportunities in life where you will have a chunk of time to do such travelling. Having said that, your life plans may or may not pan out the way you expect. Ideally, you'd take the 0% APR for 18 months and max it out. A 3% balance transfer (BT) fee breaks out to 1.5% APR, but due in 1.5 years. That's a very good loan rate if you can pay it before the APR changes. Say, you take 6 months to travel. When you return, you have one year to pay off your credit card bill. Calculate how much you will borrow and how much your monthly payments will be. $1,500 across 12 months is $125. Can you add that as a monthly expense? What will your life circumstances be when you return from travel? Do you know what your income will be? Do you know what your expected expenses will be? How much padding will you have for emergencies? I am not sure if this is the actual reason or not, but all of the major credit cards (Visa, Mastercard, Amex, Discover) provide damage insurance coverage on car rentals. Debit cards do not usually provide this coverage. So, if you use a credit card, the car company knows it will be able to recover the cost of any damage to the car.  Of course, this doesn't explain some of the odd debit card policies out there. For example, Alamo will not let you use a debit card unless you provide proof of round trip travel (like a plane or cruise ticket). But you can use a credit card without having a travel ticket. I'm not sure how having a travel ticket makes debit card users less of a risk, but apparently it does somehow. So hopefully you are not spending the money before you make it.  If you are, you are asking for trouble.  If not the solution is easy. If you use a spreadsheet for tracking have a item in your checking account running total that is simply CC to pay.   Lets say you just got paid, and your balance is like this: You can then do virtual withdrawals for each category In this case you have 70 left to spend.  Whoops the car gets a flat which costs you 5 that you put on the card and you also pay your rent by CC.  Then your spreadsheet should look like this: You still have the 70 left to spend, and when the CC bill comes due you are free to write the check. "I would say to only bother keeping the ones you know you'll use for itemized deductions. This includes any unreimbursed business expenses and vehicle licensing fees. There are a lot of other itemized tax deductions possible, but those are two common ones. Also, keep track of your business mileage (mileage before and after the trip, and commuting doesn't count as ""business mileage""). You may also want to keep receipts of all out-of-state purchases if your state is one of those that tries to collect state tax on out-of-state purchases. Ensure your supported charities are 501(c)(3), and they'll give you a receipt at the end of the year. Don't bother keeping fast food or gas receipts (unless they're business expenses)." "I would not classify utilities (including electric) as additional fees.  In many cases you interact directly with the utility (not the landlord) and pay for what you use.  There are exceptions like when renting a room. The renter's insurance also is not part of the landlord's profit, it is simply there to protect you.  In the case of loss, the landlord cannot insure your property. You have to provide your own insurance.  Its pretty low costs, typically less than 20 per month. The application fee is typical.   The move in fee is something that could be negotiated away and sounds pretty sketchy.   You can always ""let your fingers do the walking"" and find out the fees before you look at the place." I have been renting rooms out of my house for over 7 years now.  When renting to non-family, the arrangement is usually successful.  People leave for various reasons, an occasionally I will ask someone to move out if they are not working out.  In the USA, this works well because by keeping things formal (rental agreements, etc) you actually have a great business with lots of deductions that end up reducing you net income quite a bit. However, US law makes a big distinction about whether or not you're renting to family/relatives, specifically around whether or not they are paying full-market rent for their room.  If not, then you are subsidizing them which could disqualify your property (or at least the portion they are using) from being legitimately rented -- and thus no tax deductions for said activity. The other risk, -- again, in the USA -- is the possibility of a long-term relationship falling under rules of common-law marriage.  This is rare unless children are involved.  A couple who have children, married or not, may have the courts get involved to oversee the division of assets with regards to ensuring the children have a place to live and adequate financial support. For the UK, I would think the laws would be roughly similar.  Check out this website for more a detailed review.  https://www.citizensadvice.org.uk/family/living-together-marriage-and-civil-partnership/living-together-and-marriage-legal-differences/