Vacation/business trip as a business writeoff

[Steve Chenoweth]

Let's say I want to take a vacation to San Diego (or wherever), but I also intend on looking for cashflow properties and meeting with agents, mortgage brokers, property managers and other RE professionals.

How much of the trip can I legitimately deduct from my taxes? And do I need a business entity in order to do this? Any input would be appreciated, thanks!

[Jon Holdman]

If you go for a week and spend one day looking at properties, you're going to be hard pressed to deduct more than the direct expenses from the property searching.

OTOH, if you go for a week and spend eight hours a day looking at properties, even if its only for five of those days, you can probably deduct nearly everything.

In between is where things get shaky. The IRS does actually have a document that talks about this. I looked at it a few years ago after hearing some guru talk about "living you live under an entity" and making claims about making your vacations fully deductible. Sorry, I'm too lazy to go dredge it up, but if you look on their web site I'm sure you can find it. My conclusion was the idea of turning a vacation into a tax deductible expense was bogus. If you go somewhere and vacation, doing a little looking at houses isn't going to make it deductible. If you go somewhere are work enough to meet the criteria, its not going to be a vacation.

Be a good topic for conversation with your CPA.

As far as I can tell, an entity has little impact. Having a C corporation allows you some deductions that are otherwise not deductible, but they're things like fringe benefits (insurance, in particular.)