Does Travel Time Count for REPS Hours? What the IRS Says

If you're chasing Real Estate Professional Status, every hour matters. So naturally, investors wonder: can I count the time I spend driving to my properties?

The answer is frustrating: it depends, and the IRS hasn't made it easy.

Here's what we know from IRS guidance and Tax Court cases, plus practical advice on how to handle travel time in your logs.

The Short Answer

Travel time is generally NOT counted toward REPS hours according to most CPAs and the IRS's own Audit Techniques Guide.

However, some investors and tax professionals argue that certain travel time should count when it's integral to a real estate activity.

The safest approach: track travel time separately, but don't rely on it to hit your 750 hours.

What the IRS Says

The IRS Audit Techniques Guide (ATG) for Passive Activity Losses states:

"Travel time generally does not count as hours of participation."

This is the guidance IRS auditors use when examining REPS claims. If an auditor sees significant travel hours in your log, they're likely to challenge them.

The rationale is that travel is not itself a "real property trade or business" activity. It's just getting to and from where the real work happens.

What Tax Court Cases Show

Tax Court has addressed travel time in several material participation cases:

Truskowsky v. Commissioner (2003)

The taxpayer included commuting time to rental properties. The court excluded this time, stating that travel to and from work locations doesn't constitute participation in the activity itself.

Moss v. Commissioner (2011)

The taxpayer counted driving time between properties during a single work session. The court was more lenient here, suggesting that travel between active work sites might be different from commuting.

Key distinction: Courts seem to differentiate between:

• Commuting (home to property, property to home): does NOT count
• Inter-property travel (property A to property B during a work day): may count in some cases

The Practical Problem

Here's why travel time matters so much to REPS chasers:

If you have properties 30 minutes away and visit them twice a week, that's 2 hours of driving per week, or 104 hours annually.

For someone targeting exactly 750 hours, that could be the difference between qualifying and not.

And for investors with properties in different cities or states, travel time can be substantial.

Three Approaches to Travel Time

Approach 1: Don't count it at all (Conservative)

This is the safest position. Exclude all travel time from your REPS hours.

Pros:

• Audit-proof
• No arguments with IRS
• Forces you to log real, substantive hours

Cons:

• You lose potentially valid hours
• Harder to hit 750 threshold

Best for: Risk-averse investors, those who can hit 750 without travel time

Approach 2: Count inter-property travel only (Moderate)

Count travel between properties during a single work session, but not commuting from home.

Example:

• Drive from home to Property A (30 min): don't count
• Work at Property A (2 hours): count
• Drive from Property A to Property B (20 min): count
• Work at Property B (1.5 hours): count
• Drive from Property B to home (40 min): don't count

Pros:

• Reasonable middle ground
• Some Tax Court support
• Travel is integral to multi-property management

Cons:

• Still some audit risk
• Requires careful logging

Best for: Multi-property investors doing legitimate work at multiple sites

Approach 3: Count all travel (Aggressive)

Some tax professionals argue that travel to perform real estate activities is itself a real estate activity.

Pros:

• Maximizes your hours

Cons:

• High audit risk
• Contradicts IRS ATG guidance
• Most CPAs advise against this

Best for: No one, really. This position is hard to defend

What Most CPAs Recommend

The consensus among real estate-focused CPAs:

1. Track travel time separately in your log (create a "Travel" category)
2. Don't include it in your 750-hour calculation
3. Disclose it to your CPA so they can make the final call
4. Qualify without it if possible. Travel time should be gravy, not the meal

If you're short of 750 hours and travel time would put you over, discuss with your tax professional. They may include it with appropriate disclosure, but you should understand the audit risk.

How to Log Travel Time

Even if you don't count it toward REPS, log your travel anyway. Here's why:

• Corroboration: Travel logs support your other entries (if you logged "inspected Property A on Tuesday," a travel entry for that day adds credibility)
• Flexibility: Your CPA can decide whether to include it
• Backup: If rules change or you get a favorable auditor, you have the records

How to log it:

• Date: March 15, 2025
• Activity: Travel to 123 Oak Street
• Duration: 35 minutes
• Category: Travel (not counted toward REPS total)
• Notes: Drove from home to property for quarterly inspection

Keep travel entries separate from work entries so they're easy to include or exclude.

What About Phone Calls in the Car?

Here's a gray area: what if you're making work calls while driving?

Some investors log this as "phone consultation" or "tenant communication" rather than travel, arguing the drive time was spent on real estate activity.

This is more defensible than pure drive time, but document carefully:

• Who you called
• What you discussed
• How long the call lasted

If you had a 20-minute call during a 35-minute drive, you might reasonably log 20 minutes of communication and 15 minutes of travel.

The Education + Travel Double Whammy

Two categories the IRS is skeptical of: education and travel.

If you're counting hours for driving to a real estate seminar, you're stacking two questionable categories. This is a red flag in an audit.

Be especially conservative when travel is combined with other gray-area activities.

Bottom Line

Travel time probably shouldn't be the foundation of your REPS claim. The IRS position is clear, and relying on travel hours puts a target on your back.

But that doesn't mean you should ignore it:

• Track it separately
• Let your CPA make the call
• Don't depend on it to hit 750

If you can't qualify for REPS without counting travel, you might not truly be operating as a real estate professional, and that's a bigger problem than how to categorize your commute.

Start Tracking Your REPS Hours

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