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Recordkeeping for Landlords

Owning and managing rental property is a business activity. Depending on the number of properties you own, landlording can be a full- or part-time gig. Whether you create a separate business entity or not for your rental property, recordkeeping is important primarily for tax purposes and therefore requires two types of records: (a) a record of your income and expenses, and (b) documentation of your income and expenses.

Income & Expense Records

Tracking rental property income and expenses will help you complete rental property-related tax forms, such as Form 1040 Schedule E. The tax forms will determine if you earned a profit or incurred a loss for that year from your rental property. Because Schedule E is organized by each property, you’ll want to be sure to keep income and expense records separate for each rental address.

Supporting Documentation

Documentation of your income and expenses will come in handy if you are audited. Receipts, credit card statements, and cancelled checks will prove the income earned and expenses incurred should the IRS question the information reported to them. Supporting documentation will create a paper trail and prove that your claims are correct and the tax deductions you receive are legitimate.

Worth It

Landlords with good recordkeeping habits will maximize the tax benefits of owning and managing rental property. Keeping track of income and expenses and maintaining supporting documentation will reduce the stress if audited, let you know how your landlording is doing financially, and provide overall piece of mind.

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General

Rental Property Accounting Software for Landlords

Tracking income and expenses for rental property is a task most landlords do not enjoy. This record keeping task is time consuming and, to be frank, often mind-numbingly boring. Nevertheless, maintaining good accounting records makes tax time easier, is important to understanding how your landlord business is doing, and provides peace of mind.

Landlords can select from a variety of ways to record income and expenses. Cost, ease-of-use, and features (like reports) are items to consider when deciding on which rental property accounting method to pursue. We’ll take a look at some common ways, from the simplest to the most complicated, for tracking rental property income and expenses.

Tracking MethodPros & Cons
Spreadsheet* Free
* Create your own with Google Docs or Microsoft Excel
* Download free rental income and expense worksheet
*Cannot easily generate reports
Free Accounting Software* Free
* Simple and intuitive
* Easily generate reports like a Schedule E Helper and Profit & Loss statement
* RentalIncomeExpense.com
Paid Accounting Software* Expensive
* Can be overkill for a small landlord
* Complex and challenging to understand
* QuickBooks, Buildium, RentecDirect
Landlord Services * Provides benefits in addition to record keeping such as online rent payments, tenant screening, credit reporting, and vacancy listings
* Many times income and expense tracking is included as a free feature
* ClearNow, Zillow Rental Manager

Final Thoughts

While tracking rental income and expenses is not the most desirable task, finding the solution that best fits the budget, is easy to use, and provides features like reports becomes important to make tax time easier and provide peace of mind. From simple spreadsheets to free accounting software to paid accounting software to general landlord services, fortunately landlords have a choice when it comes to finding the right rental property accounting software for their needs.

Categories
General

Free Landlord Software For Tracking Income and Expenses

We’re starting a blog for RentalIncomeExpense.com – a free and easy rental income and expense tracking tool for landlords that our company, ClearNow, introduced back in 2016.

Expensive property management software (like Renttec Direct, Tenant Cloud, or Buildium) is overkill for the small landlord – costing more in time and money than it is worth. On the other hand, an Excel spreadsheet isn’t nearly powerful enough.  For example, it cannot easily generate the different reports that a landlord needs.

RentalIncomeExpense.com is the best of all worlds:

  • Simple to setup
  • FREE
  • Designed for landlords
  • Instant reports that matter (such as profit & loss and the 1040 Schedule E helper)
  • Accessible from your smartphone
  • Backed up by ClearNow’s proven online infrastructure (since 2000)

To setup a free account, get started at www.RentalIncomeExpense.com today!