Can You Count Travel Time Toward Your REPS Hours? (w/Examples) + FAQs

This article reflects federal tax rules under IRC §469 as of June 2026 and covers tax year 2025 (returns filed in 2026) and the 2026 tax year. State conformity varies, so check your state’s rules. Tax law changes — confirm current figures before you file.

Quick Answer

Generally no. For tax year 2025, the IRS treats travel between your home and a rental property as commuting, which does not count toward your 750 hours for Real Estate Professional Status (REPS). Travel that is integral to the work — like driving between active job sites — may count, but it is risky.

Most investors chasing REPS assume every minute behind the wheel pushes them closer to the 750-hour finish line, and that single wrong assumption can collapse a six-figure loss deduction in an audit. The IRS Audit Techniques Guide for passive losses tells examiners flatly that “travel time generally does not count as hours of participation,” so logging hours of drive time as qualifying work paints a target on your return.

The stakes are real and the timing matters. REPS is the only doorway that turns normally “passive” rental losses into losses you can deduct against your wages or business income in the same year — and with 100% bonus depreciation restored for property placed in service in 2025 and after, a single year of REPS can unlock tens of thousands in deductions. One analysis of REPS audits found that recordkeeping and hour-counting are the leading reasons taxpayers lose, and travel time sits right at the center of that fight.

🚗 When commuting drive time is excluded and when travel can legitimately count
🧾 How a home office can quietly turn your drives into qualifying business travel
⚖️ What the Tax Court actually ruled in Truskowsky, Trzeciak, Leyh, and Lucero
🔢 A fully worked example showing how 104 hours of travel can make or break your 750
✅ The exact way to log travel so you keep the hours without inviting an audit

What “REPS” and the 750-Hour Test Really Mean

Real Estate Professional Status, or REPS, is a federal tax classification under IRC §469(c)(7). It does not come from a license, a board, or a real estate exam. It is a status you earn by your hours, and it changes how the IRS treats your rental losses.

Normally, rental real estate is “passive” by default. That means you can only use rental losses to offset other passive income, not your W-2 wages or business profit. REPS removes that wall for landlords who truly work in real estate, letting qualifying losses flow against ordinary income in the same tax year.

To qualify for tax year 2025, you must pass two tests, both found in the statute. First, more than half of all the personal services you perform in all your trades or businesses during the year must be in real property trades or businesses. Second, you must perform more than 750 hours of services in those real property trades or businesses. The plain-English meaning is that real estate has to be your main job by time spent — not a side hustle squeezed around a full-time career.

The consequence of missing either test is steep. If you fall short by even one hour or one percentage point, your rental losses snap back to passive, and the IRS can disallow the deduction, recompute your tax, and add a 20% accuracy-related penalty under IRC §6662 plus interest. A landlord counting on a $60,000 loss could suddenly owe tax on income they thought was sheltered.

A common misconception is that REPS alone lets you deduct losses. It does not. REPS only makes you eligible; you must still materially participate in each rental activity (or make the grouping election under Treas. Reg. §1.469-9(g)) to actually take the loss. Travel time questions show up in both the 750-hour test and the material participation test, which is why it matters so much.

What you should do about it: keep a contemporaneous time log all year (more on that below), and before you file, confirm you clear 750 hours without leaning on shaky categories like travel.

The Core Question: Does Travel Time Count?

The honest answer is it depends on what kind of travel it is — and the IRS default position is “no.” This section breaks the travel into the three situations investors actually face.

Commuting From Home to a Rental (Usually Does NOT Count)

Driving from your house to a rental and back is the IRS’s textbook example of commuting, and commuting is personal, not business participation. In Truskowsky v. Commissioner, T.C. Summary 2003-130, the Tax Court held that unless a taxpayer proves day-to-day managerial involvement, travel between the taxpayer’s home and the rental activity is commuting and does not qualify toward the hourly requirements.

The consequence is that hours you log as “drive to property” can be struck from your total during an audit. If those hours were the only thing pushing you past 750, removing them sinks your whole REPS claim and the loss with it.

A common misconception is that because you can deduct mileage to a rental, the time must count too. Those are two different rules — mileage is a vehicle expense deduction, while hours are a participation test. You can deduct the miles and still be told the minutes don’t count.

What to do: assume home-to-property commuting does not count, and build your 750 hours from substantive work instead.

Travel Between Active Work Sites (May Count)

Travel that is integral to the activity stands on firmer ground. The Taft Law analysis of Lucero v. Commissioner, T.C. Memo 2020-136 explains that travel only counts toward material participation when it is “integral to the activity” — for example, driving from your rental to the hardware store to buy supplies for that property, then back. Driving between two properties you are actively working that day during a single work session is the strongest version of this argument.

The consequence of getting this wrong cuts both ways. Counted carelessly, integral travel still gets challenged; documented well, it can legitimately add hours. In Leyh, T.C. Summary 2015-27, an investor with 12 rentals had only 632.5 logged hours, but the court let her restate her log to add travel among properties she had failed to record, accepting her trial testimony.

A common misconception is that all property-to-property driving automatically counts. It does not — the travel must connect actual work performed at each end, not aimless drive-bys.

What to do: log inter-property and supply-run travel separately, tie each trip to documented work at both ends, and treat these hours as a bonus rather than the foundation of your 750.

The Home Office Game-Changer

Here is the nuance most landlords miss. If you maintain a qualifying home office for your rental business, your “commute” arguably no longer exists, because your first business location is your home. Under the commuting rules in IRC §162, travel from one business location to another is business travel, not commuting.

In Trzeciak, T.C. Memo 2012-83, the IRS denied the taxpayer’s travel hours, but the court record suggested the IRS might have entertained the travel time had the taxpayer asserted a home office for the rental activity. The consequence of skipping the home office is that you lose this argument entirely and are stuck with the commuting rule.

A common misconception is that any desk at home creates this benefit. It does not — the office must be used regularly and exclusively for your real estate business to qualify.

What to do: if you run your rentals from home, set up a qualifying home office, document its use, and then drives from that office to your properties become defensible business travel rather than commuting.

Which Situation Applies to You?

Travel rules hinge on how you operate, so find the row that matches you before you count a single mile.

You have one rental and drive there from home, no home office: Treat travel as commuting — do not count it.
You have one rental but a qualifying home office: Your drives may count as business travel; document the office and each trip.
You manage multiple properties and work several in one day: Inter-property travel during that work session may count; log work at both ends.
You drive to buy supplies for a specific property: That integral travel likely counts; keep the receipt and tie it to the job.
You drive to seminars or education: High risk — see the education warning below; counting it stacks two weak categories.
You’re a full-time agent or broker easily over 750: Don’t bother counting travel; you don’t need it and it only adds audit risk.

Three Common Travel Scenarios and Their Outcomes

These three tables show how the same drive lands differently depending on the facts.

Scenario 1: The Suburban Landlord

What the Investor Did	How the IRS Treats It
Drove 30 minutes from home to a single rental twice a week, no home office	Commuting — excluded from the 750-hour total
Logged the 104 annual travel hours as “participation”	Likely struck in audit, can drop investor below 750
Performed actual repairs and tenant meetings on site	Those on-site hours count fully

Scenario 2: The Multi-Property Operator

What the Investor Did	How the IRS Treats It
Worked Property A, then drove to Property B to handle a leak the same day	Inter-property travel may count as integral
Drove from Property B to the hardware store and back for parts	Integral supply travel — supportable per Lucero reasoning
Logged each trip with the work performed at both ends	Strengthens the claim and corroborates other entries

Scenario 3: The Home-Office Investor

What the Investor Did	How the IRS Treats It
Ran all rental management from a regular-and-exclusive home office	Home becomes first business location
Drove from the home office to properties for inspections	Business travel, not commuting — defensible per Trzeciak hint
Failed to document exclusive office use	Home office disallowed, travel reverts to commuting

A Fully Worked Example: How Travel Makes or Breaks 750

Numbers make this concrete. Meet David, a software engineer who works a 1,900-hour W-2 job and owns four rentals 30 minutes from home with no home office.

David logs his real estate hours for 2025 like this:

On-site repairs, inspections, and tenant meetings: 410 hours
Bookkeeping, leasing, advertising, and calls: 250 hours
Travel from home to properties and back: 110 hours

David’s substantive hours total 410 + 250 = 660 hours. To reach REPS he adds his 110 travel hours and reports 770 hours, feeling safe above the 750 line.

In an audit, the examiner applies the Audit Techniques Guide and Truskowsky, then strikes the 110 commuting hours. David drops to 660 hours — below 750 — and also fails the “more than half” test because his 1,900 W-2 hours dwarf his 660 real estate hours. His REPS claim collapses.

The dollar damage: David had used REPS to deduct a $58,000 rental loss (driven by bonus depreciation) against his wages. Disallowed, that $58,000 becomes taxable. At a 24% marginal rate for 2025, that is $13,920 in additional tax, plus a likely 20% accuracy penalty of $2,784, plus interest — roughly $16,700+ before interest.

Now meet Maria, who owns the same four properties but runs them from a regular-and-exclusive home office. Her drives from that office to the rentals are business travel, not commuting. Her 660 substantive hours plus 110 office-to-property hours equal 770 hours, and because she is retired with no other job, she easily passes the “more than half” test. Same mileage, completely different outcome — because of the home office.

How to Log Travel Time the Right Way

Even when travel won’t count, log it — it corroborates the rest of your record. The material participation regulations at Treas. Reg. §1.469-5T(f)(4) allow proof “by any reasonable means,” including appointment books, calendars, and narrative summaries, but the courts demand contemporaneous detail.

A clean log entry has four parts:

Date — e.g., March 15, 2025
Activity — “Drove from home office to 123 Oak St. for quarterly inspection”
Duration — 35 minutes
Category — Travel (kept separate so it can be included or excluded)

Keep travel in its own category so you or your CPA can add or remove it cleanly. This separation matters: in Manalo, T.C. Summary 2012-30, last-minute reconstructed logs with no backing evidence were rejected, while in Hailstock, T.C. Memo 2016-146 and Birdsong, T.C. Memo 2018-148, detailed contemporaneous records won the case.

Forms, Deadlines, and What This Costs

REPS itself has no separate “REPS form.” You report rental income and losses on Schedule E (Form 1040), and the passive-loss limitation is calculated on Form 8582. If you qualify as a real estate professional and materially participate, your rentals come off Form 8582 as non-passive.

The filing deadline for 2025 returns is April 15, 2026, or October 15, 2026 with a valid extension. If you want to group all rentals as one activity to pass material participation, you generally attach the grouping election statement under Treas. Reg. §1.469-9(g) to a timely filed return — missing it can force you to prove material participation property-by-property.

On cost and timing: tracking hours is free but takes year-round discipline (a few minutes a day). If your losses are large or you expect scrutiny, a CPA who handles REPS audits typically charges $1,500–$5,000+ for return prep and audit support — cheap insurance against a five-figure disallowance. An audit of a REPS year can stretch 12–24 months from notice to resolution.

This article is educational and is not a substitute for advice from a licensed tax professional about your specific facts. If you have multiple states, large losses, a short-term rental strategy, or an audit notice, that is the point to hire a CPA or tax attorney.

Does Your State Follow the Federal Rule?

Start with the federal rule, then check your state, because conformity is not automatic. Many states with an income tax “conform” to the federal treatment of passive losses and will follow your REPS determination — but they do so under their own statutes, and some decouple from specific federal provisions like bonus depreciation, which changes the size of your loss.

The consequence of assuming conformity is a surprise state bill. A state that does not allow 100% bonus depreciation may let you claim REPS yet still cap the deductible loss, leaving a different number on your state return than your federal one. Check your state’s department of revenue guidance before you file.

Nine states have no broad personal income tax for 2025 — Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming — so REPS has little or no state income-tax impact for residents there. What to do: confirm your state’s passive-loss and depreciation conformity, and run the state number separately rather than assuming it matches federal.

Mistakes to Avoid

Counting home-to-property commuting as participation. It is excluded under Truskowsky, and the struck hours can drop you below 750 and trigger penalties.
Relying on travel to reach exactly 750. If travel is the difference, the IRS will look hardest at exactly those hours, and you lose the cushion you need.
Claiming a home office you don’t actually qualify for. Without regular-and-exclusive use, the office is disallowed and your travel reverts to commuting.
Stacking travel onto education hours. Driving to seminars combines two weak categories and is a recognized audit red flag.
Reconstructing your log after an audit notice. Manalo and Pohoski show courts reject “ballpark guesstimates” and litigation-prepared logs.
Reporting time that’s excessive for the task. In Lucero, padded entries like hours shopping for coffee filters destroyed the taxpayer’s credibility.
Forgetting the “more than half” test. Passing 750 hours means nothing if your W-2 job consumes more time than your real estate work.
Skipping the grouping election. Without it, you may have to prove material participation in each property separately, a much harder bar.

Do’s and Don’ts

✅ Do keep a contemporaneous, dated log — courts reward real-time records like in Hailstock.
✅ Do separate travel into its own category so it’s easy to include or exclude.
✅ Do set up a qualifying home office if you manage from home — it can convert commuting into business travel.
✅ Do tie integral travel to documented work at both ends of the trip.
✅ Do clear 750 hours on substantive work before adding any travel, so travel is a cushion, not the foundation.
❌ Don’t assume deductible mileage means countable hours — they are separate rules.
❌ Don’t count “on-call” time; Moss says you must actually perform services.
❌ Don’t combine travel with education hours without strong documentation.
❌ Don’t wait until an audit to build your log; reconstruction rarely survives.
❌ Don’t ignore your state’s conformity and depreciation rules.

Pros and Cons of Counting Travel Time

➕ Pro: Legitimate integral travel can add real hours, especially for multi-property operators (Leyh).
➕ Pro: A home office can reclassify drives as business travel, strengthening the claim.
➕ Pro: Travel logs corroborate your other entries and boost overall credibility.
➕ Pro: Documenting travel preserves flexibility for your CPA to include it with disclosure.
➕ Pro: Tracking trips supports your separate mileage deduction on Schedule E.
➖ Con: The IRS default is that commuting travel does not count, so you’re arguing uphill.
➖ Con: Travel hours draw extra audit scrutiny and can flag the whole return.
➖ Con: Relying on travel to hit 750 leaves no margin if it’s disallowed.
➖ Con: Aggressive travel positions contradict the Audit Techniques Guide and most CPA advice.
➖ Con: A disallowance can cascade into penalties and interest on a large loss.

What to Do Next

Audit your current log and split every entry into “substantive work” versus “travel.”
Add up substantive hours only and confirm you clear 750 without travel; if not, add real work, not drive time.
Set up a qualifying home office now if you run rentals from home, and document regular-and-exclusive use.
Keep travel in its own category, tying each trip to work performed at both ends.
Confirm the “more than half” test by comparing real estate hours to all other work hours.
File Schedule E and Form 8582 correctly, and attach the §1.469-9(g) grouping election by your deadline if needed.
Call a REPS-experienced CPA if your loss is large, you operate in multiple states, or you receive an audit notice.

FAQs

Does travel time count toward the 750-hour REPS test? Generally no. For tax year 2025, the IRS treats home-to-property travel as commuting, which is excluded. Travel integral to the work, like driving between active job sites, may count but draws scrutiny.

Why doesn’t commuting to my rental count? Because it’s personal travel. Under Truskowsky and IRC §162 commuting rules, driving from home to a work location isn’t participation in the activity itself — it’s just getting there.

Can a home office change the answer? Yes. A regular-and-exclusive home office makes your home your first business location, so drives to your rentals become business travel rather than commuting, as hinted in Trzeciak.

Does travel between two properties count? Sometimes. Travel that is integral — driving between properties you actively work the same day, or to buy supplies — may count, but tie each trip to documented work at both ends.

Can I count time spent driving to a real estate seminar? No, treat it as high-risk. Combining travel with education stacks two weak categories the IRS scrutinizes heavily, so don’t rely on these hours.

How many hours do I need for REPS in 2025? More than 750 hours in real property trades or businesses, and more than half of all your personal service time must be in real estate.

Can I still deduct mileage if the time doesn’t count? Yes. Mileage is a vehicle expense on Schedule E, separate from the hours test. You can deduct the miles even when the minutes don’t count toward 750.

What records prove my hours? A contemporaneous log. Treas. Reg. §1.469-5T(f)(4) allows “any reasonable means,” but courts want dated, detailed, real-time records — not after-the-fact estimates, as Manalo and Pohoski show.

Does “on-call” time count toward REPS? No. In Moss, the Tax Court ruled time a landlord was merely available to tenants isn’t participation because no services were actually performed.

Do all states follow federal REPS treatment? Not always. Many income-tax states conform, but some decouple from bonus depreciation, changing your loss size. Nine no-income-tax states make REPS largely irrelevant for state purposes.

What happens if the IRS disallows my travel hours? Your loss can be denied. If struck hours drop you below 750, rental losses revert to passive, the deduction is disallowed, and a 20% accuracy penalty plus interest can apply.

Which forms report REPS losses? Schedule E and Form 8582. You report rentals on Schedule E, and Form 8582 handles the passive-loss limitation; qualifying as a material-participant real estate professional removes the rentals from passive treatment.

Word count: approximately 2,950 words.

Related reading