Rental Property Accounting Guide for Landlords in 2025

AppFolio is property management software that caters primarily to professional property managers with residential, commercial, and student housing properties. Stessa’s intuitive interface and robust features take the guesswork out of asset and property management, letting you focus on growing your rental business. Its unique positioning as “asset management” software sets it apart from traditional property management platforms. Cash accounting succeeds with proper tracking despite its simplicity.

• It has a user-friendly interface, offering an intuitive experience that allows for a short learning curve, a swift onboarding process, and a seamless start.
• When you’re completing these forms, make sure to take your time, double-check your calculations, and provide accurate financial information.
• Simply put, Airbnb accounting is the process of recording income and expenses related to your rental property.
• As CFOs, we know how critical and challenging it is to make the right decision when selecting software.
• ✔ Scalability – A great software shouldn’t require switching later as you grow.

Is Property Accounting Difficult?

Don’t just buy property – learn how to manage it successfully and maximize your investment potential. We’ll cover these topics in the following sections so you can get a better understanding of how these factors impact your bookkeeping. There are certain exceptions to this guideline if you rented out your property for less than 15 days during the year. The magic happens when our intuitive software and real, human support come together. Book a demo today to see what running your business is like with Bench.

How long should I keep rental property accounting records?

For more information on deducting rental property expenses, refer to the IRS guidelines, or speak with one of our tax professionals who can provide more clarity. Typically, these roles are filled by two different individuals, a bookkeeper and an accountant. By maintaining accurate records throughout the year, you’ll be equipped to navigate the complexities of tax filing with confidence. This includes maximizing deductions, avoiding penalties, and ensuring compliance with relevant tax regulations. When you generate financial statements, you take the information from your journal (or general ledger if you use double-entry), and use it to create reports that rack how your business is performing. They’re essential for long-term strategy, and make it much easier to file your taxes at the end of the year.

Monthly Close, Owner Statements, and 1099s

Rental property ownership often involves fluctuating expenses, such as repairs and maintenance. One rule of thumb rental property owners use is to put aside 50% of all rental income for expenses. Landlord Studio helps you create a streamlined workflow, minimizing the time you spend managing your rental accounts.

If you don’t have this information already property tax assessments can usually be found accounting for landlords on the website of your local government. The assessment will be broken into the land value and the value of buildings/improvements. You will need to determine the ratio of the buildings/improvements value to the total property value.

With purpose-built rental property accounting software like Landlord Studio, you can save time and increase profits by streamlining your rental property bookkeeping. Proper accounting can also make it easy to create rental property financial reports. These statements provide a quick glance at how your rental properties are performing financially. They typically include an itemized breakdown of income sources and expenses, as well as any debt you might owe on a property, like a mortgage. You can use a dedicated rental income tracking software or a simple spreadsheet to organize your financial data. Software options typically streamline categorizing expenses, generating financial statements, and preparing for tax season.

From there though, it is a valid next question of whether or not more than one business account is needed. As with most slightly more complicated questions, the answer depends on your unique situation. Statement of Comprehensive Income Personal expenses in one account, all of your real estate business expenses in another.

• Are you spending your days putting out fires that your tools should be preventing?
• Setting up your property management accounting involves several key steps.
• This emphasizes that thorough documentation isn’t merely about staying organized.
• The IRS requires all rental income to be reported on your tax return.
• Of course, you will have to add new line items for new transactions, but each new item should be sorted into existing categories that follow the coding system you set up.

Rental Property Accounting: Landlord Gurus Takeaway

• Use accounting software such as Buildium, if possible, to streamline the process.
• However, even after you scan everything, it’s a good idea to back things up and keep a few folders with regular receipts and other paper records.
• When tax time comes around, have all your documents and data organized.
• These integrations allow for a quick transfer of financial data, simplifying accounting tasks and improving efficiency in managing rental properties.
• When it’s time to file 1099s, your information is already organized and ready to go.

Or, your management company isn’t keeping up on routine maintenance, leading to more serious problems down the road. Calculating OER https://www.bookstime.com/ using specific expenses can help you narrow down the reason for its rise and help you get it back under control. A measure of profitability, the OER tells you how well you’re controlling expenses relative to income. Take all operating expenses, less depreciation, and divide them by operating income to get your OER. It’s one of the few ratios used by investors which includes depreciation, which makes it more inclusive of the property costs. Cash on cash return tells you the total return on the money you have in your real estate investment.