Does Travel Time Count Toward Material Participation?

Most of your driving counts. Travel between two of your properties, a run from a unit to the supply store and back, hauling materials to a job — courts have treated all of that as work. The one trip that gets challenged is the leg between your home and a property, and even that has a real argument behind it if you run a qualifying home office.

Here is the breakdown before the explanation.

What the regulations actually say about travel

Nothing. Section 469 and its regulations never mention travel at all.

That matters, because it means there is no special travel rule to look up. An hour behind the wheel counts if the driving is work done in connection with the activity, and does not if it isn't. Treas. Reg. Section 1.469-5(f)(1) counts "any work done by an individual in connection with an activity in which the individual owns an interest at the time the work is done." Reg. Section 1.469-9(b)(4) uses nearly identical language for the 750-hour test.

Because the wording is the same in both places, there is no basis for counting a drive toward one test and not the other. Anyone who tells you travel counts toward the 750 hours but not toward material participation is inventing a distinction the regulations do not make.

The one trip that gets challenged

The leg between your home and a property.

Every time the Tax Court has squarely decided this, it has treated that drive as personal commuting rather than work. The most on-point case is Lucero v. Commissioner (T.C. Memo. 2020-136) — and it matters especially for short-term rental owners, because it was an STR case decided under the 100-hour test. The taxpayer drove out to the property six to nine times a year to landscape, clean, take inventory, and make or oversee repairs. Real work, on arrival. The court still excluded the driving.

Truskowsky v. Commissioner (T.C. Summ. Op. 2003-130) reached the same conclusion, stating that commuting "is an inherently personal activity and as such does not constitute 'work' in connection with a trade or business."

But read Truskowsky carefully, because it also does the opposite. The court expressly recognised that "travel in some circumstances can be 'work' done in connection with a trade or business," and it counted the taxpayers' travel between their boarding farm and the veterinary facilities. It rejected the home legs and accepted the between-locations legs. That is the actual line the cases draw.

The home office argument most guides skip

Here is the part that is missing from nearly every article on this subject, and it is the strongest position available if you genuinely run your portfolio from home.

Under Rev. Rul. 99-7, Holding (3), if your home office is your principal place of business within the meaning of Section 280A(c)(1)(A), then a trip from the home office to another work location is travel between two business locations — not a commute.

Look at what that does to the reasoning in Lucero and Truskowsky. Both courts excluded the drive by importing the commuting-expense doctrine: home to work is personal, therefore not work. If the home is a place of business, that rationale evaporates. You are not commuting to work; you are travelling from one work location to another.

Two honest caveats. First, Rev. Rul. 99-7 is a Section 162 expense ruling, and no court has yet applied it to counting hours under Section 469. It is a defensible position with real support behind it, not settled law. Second, the home office has to genuinely qualify — exclusive and regular use as your principal place of business. A laptop on the kitchen table is not a home office, and claiming one that does not qualify creates a bigger problem than the hours it was meant to save.

If you do run a real home office and manage the portfolio from it, this is worth raising with your CPA before you decide how to log those drives.

The case that went the other way

Leyh v. Commissioner (T.C. Summ. Op. 2015-27) is worth knowing about. The court accepted a revised log in which the taxpayer added roughly an hour and a half a day of travel between her home and the properties, taking her from about 632 hours to roughly 846, and found she had spent more than 750 hours on the rental activity.

Before you lean on it: the IRS never argued that travel was categorically non-qualifying. Its position was that the original log already included the travel and the taxpayer was double counting. So the court never decided the legal question at all. And as a summary opinion it cannot be cited as precedent in any other case.

It is a data point that examiners do not always challenge travel. It is not authority that travel is safe.

Mileage deductions are a completely separate question

This is the single most common confusion in this area, so it is worth stating plainly.

Whether you can deduct the cost of driving to your property is a Section 162 expense question. Whether the time counts toward your hours is a Section 469 participation question. They are decided under different rules and they can come out differently.

You can deduct the mileage to your rental in a year when those same hours would not survive an examination. Do not let a CPA's comfort with the mileage deduction convince you the hours are equally safe, and do not let a challenge to the hours make you think you have lost the mileage.

How to log travel so it survives

The practical rule is not "do not count it." It is: log travel on its own line.

Keep travel entries separate from the work you did on arrival, with the route in the description — "drove Maple St to Oak Ave, delivered replacement blinds," not "3 hours property work." Then if an examiner strikes the travel, what remains is a clean log of the actual work, and you can see immediately whether you still clear the threshold.

That last part is the real reason. A log that only reaches 100 or 750 hours because of driving has no margin at all, and travel is the first thing an examiner reaches for. If your qualification depends entirely on the most challengeable category in your log, you have a fragile claim regardless of who is right about the law.

Two other habits worth keeping. Do not round trips to convenient blocks — in Penley v. Commissioner (T.C. Memo. 2017-65), driving time buried inside rounded, unsegregated entries contributed to the court rejecting the entire log. And do not log a trip that mixed business with personal errands as though it were all business; courts discount logs that look inflated relative to the task, and one implausible entry casts doubt on everything around it.