Rental property owners should track income and expenses separately for each property, record security deposits as liabilities, separate repairs from improvements and keep personal money apart from rental money. This shows which properties perform and makes tax time easier.
1Why track each property separately
If all rental income and costs sit in one pool, you cannot tell which property is making money. Tracking by property shows rent collected, repairs, insurance, taxes and profit for each one.
2Income and deposits
- Record rent as income in the month it belongs to
- Track late fees and other charges separately
- Record security deposits as money you owe, not as income
- Keep a record for each tenant
3Expenses to track
- Mortgage interest and loan payments, with principal recorded correctly
- Property taxes and insurance
- Repairs and maintenance
- Management fees
- Utilities you pay
- Travel and supplies related to the property
Repairs keep a property in working order and are generally expensed. Improvements add value and are handled differently for tax. Ask your CPA how to treat a large project.
4Keep your money separate
Use a separate bank account for rental activity. Mixing personal spending with rental money makes the books messy and makes it hard to prove what belongs to the rental.
5Monthly routine
- Record rent and deposits
- Categorize every expense to the right property
- Reconcile each bank account
- Review profit by property
A short monthly review shows problem properties early. We organize records so your CPA can prepare returns without chasing missing items.
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