 Expenses pay to to an obtain a mortgage. So certain expenses you pay to obtain a mortgage on your rental property can't be deducted as interest. These expenses which include mortgage commission, abstract fees and recording fees are capital expenses that are part of your basis in the property. Now this is something that it seems like well what's the difference but it can have a big impact because what we want to be able to do is record things so that we can get the expense as soon as possible. So what I'd like to do is say hey look can't I record this like as an expense right now as like interest I'm paying now or something so I could take the expense now because if I have to record it as part of the purchase of the property then I'm gonna have to put it on the books as an asset and I have to depreciate it over a very long time frame which is a lot worse than getting the expense so the general rule is that I would like to whenever possible that get the expense sooner rather than later. So form a 1098 mortgage interest statement so if you paid $600 or more of mortgage interest on your rental property to any one person you should receive a form 1098 or similar statement showing the interest you paid for the year. So you're probably familiar with that form with regards to mortgage interest for a home your personal residence obviously you get a similar form similar idea similar concept here but it wouldn't be deducted on like a schedule A if it was the rental property it would be showing you the interest that was paid for the business property so if you and at least one other person other than your spouse if you file a joint return reliable for and paid interest on the mortgage and the other person receive form 1098 report your share of interest on schedule E form 1040 line 13. So attach a statement to your return showing the name and address of the other person on the dotted line when when to line 13 enter C attached. So normally you're going to get that 1098 the IRS also gets the 1098 if the 1098 didn't go to you but went to someone else but you are responsible for part of the interest now it gets a little confusing on the IRS's side of things because they would expect to be seeing the 1098 so you have to tell them this is my portion of the mortgage interest and the 1098 got reported to this other person for whatever reason legal and other professional fees you can deduct as rental expense legal and other professional expenses such as tax return preparation fees you pay to prepare schedule E part one so when you have tax return preparation you can allocate part of the fee because part of the fee was for the business use of the schedule E the rental property for example on your 2022 schedule E you can deduct fees paid in 2022 to prepare part one of your 2021 schedule E so you can also deduct as rental expense any expense other than federal taxes and penalties you paid to resolve a tax underpayment related to your rental activities local benefit taxes in most cases you can't deduct charges for local benefits that increase the value of your property such as charges for putting in streets sidewalks or water and sewer systems these charges are non depreciable capital expenditures and must be added to the basis of your property so we have a similar situation we saw before from our perspective and the taxpayer side we would like to say hey look I would like to expense these now rather than having to add them as part of the property so that I can get the benefit from a tax perspective today as opposed to depreciating them over a very long time frame so those common scenario often comes up and from our perspective the question is always is I would like to get the benefit sooner rather than later can I expense it now rather than capitalizing it and the tax code is often saying we want you to include that as the capital assets so that you get the expense but you don't get it until you depreciate it so you get this longer big long time frame and the expense benefiting over time okay however you can deduct local benefit taxes that are for maintaining repairing or paying interest charges for the benefits local transportation expenses so you may be able to deduct your ordinary and necessary local transportation expenses if you incur them to collect rental income or to manage conserve or maintain your rental it's a rental property so now you're moving around to collect your income that's going to be part of you know the business system so you would think those would be deductible however transportation expenses incurred to travel between your home and a rental property generally constitute non-deductible commuting costs unless you use your home as your principal place of business so now we've got the situation and this is kind of they're trying to kind of mirror what you might see on like a business side of things so if you had a w2 like employee they don't get to deduct the the commute that they have to go to work so you would think that a schedule c business or a schedule e business rental property also wouldn't get to deduct like the normal commuting costs i think is the general concept here but what if your your your home office is your principal place of business well now you would think that the movement from your principal place of business to some other place could be non commuting and therefore deductible and then you get into the questions of what does it mean to be your principal place of business and so on and so forth and you could see publication 587 business use of your home for information on determining if your home office qualifies as a principal place of business so generally if you use your personal car pickup truck or light van for rental activities you can deduct the expenses using one of two methods we got the actual expenses or the standard mileage rate so that's the the common issue with the automobiles when you're doing your bookkeeping you're going to be you know having expenses come up gasoline maintenance and so on recording that but when you're then recording it for taxes the question is do you want to have the actual use the actual method or a standard mileage method similar kind of concept that we see on a normal kind of schedule c type of business the standard mileage method is usually kind of easier to calculate and so then you can try to think about those two methods in which would be most beneficial oftentimes in the first year of operation the the direct method might be more beneficial especially if you're allowed to use accelerated depreciation methods but then you can't you might be limited from going from the direct method and then switching to the standard mileage method so you kind of have to think about it in terms of what do you think the benefit will be over the life of the use of the vehicle as opposed to in one particular year so any case for 2022 the standard mileage rate for business use it's 58.5 cents per mile from january 1st 2022 to june 30th 2022 from july 1st 2022 to december 31st 2022 the standard mileage rate for business use is 62.5 cents per mile so now you've got two rates for the year because they increased it like in the middle of the year so for more information see chapter four of publication 463