Owning rental property offers fantastic income potential, but navigating the tax deductions can be tricky. While maximizing deductions is smart, overzealous claims can raise IRS flags. Understanding which auto deductions are most likely to trigger scrutiny is crucial.
Common red flags include excessively high repair costs, claiming personal expenses as business deductions (think weekend getaways disguised as property management trips!), and aggressive depreciation calculations. Ensure all deductions are directly related to the upkeep and operation of your rental property and keep impeccable records.
Mileage deductions are another potential hotspot. Document every trip's purpose, date, and mileage meticulously. Consider using a mileage tracking app for accuracy.
Consult with a qualified tax professional to ensure you're claiming all legitimate deductions without pushing the boundaries. Accurate record-keeping and professional guidance can help you confidently navigate rental property taxes and keep the IRS at bay, maximizing your profits legally and ethically.
