Tag: income and expense tracking

Categories
General

Importance of Landlord Record Keeping for Rental Property

Record Keeping for Landlords
Landlords use RentalIncomeExpense.com to easily track income and expenses.

Owning and managing rental property is a business activity. Landlording can be a full or part time gig. Whether you create a separate business for it or not, landlord record keeping for rental property is important for tax purposes. The two main types of records are the income and expenses and the supporting documentation of the income and expenses.

Income & Expense Records

Landlord record keeping for rental property makes it easier to complete tax forms, such as Form 1040 Schedule E. The tax forms determine if you made a profit or had a loss for that year from your rental property. Schedule E organizes activity by each property, so you’ll want to keep income and expense records for each rental address.

Supporting Documentation for Landlord Record Keeping for Rental Property

Proof of income and expenses is especially important if you are audited. Receipts and cancelled checks prove the income earned and expenses incurred in case the IRS has questions. Supporting documents leave a paper trail and prove that your claims are correct. They also show 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 and provide peace of mind. RentalIncomeExpense.com is a free and complete solution for landlords. Try it today!

Categories
Landlord Tips

Move in Checklist for Landlords and Tenants

Move in Checklist
The move in checklist is a valuable guide for landlords and tenants.

Lists are helpful tools as they serve as reminders. Grocery, cleaning, and “honey do” lists are just a few of the many popular ones to mention. The move in check list for landlords and tenants is a valuable guide for both parties. They can complete the checklist together during the walk through of the rental property so all parties are on the same page.

Checklist Benefits

For landlords, the move in checklist for landlords and tenants keeps track of the condition of the rental property. It also serves as a reference to identify any damage that may have occurred during occupancy beyond normal wear and tear. For tenants, the checklist serves as guidance for what repairs or improvements should be made prior to or during the tenancy. It also gives tenants an understanding of the condition of the rental before move in.

Checklist Contents

The move in checklist for landlords and tenants should include the main components of each room in the rental property. For example, items to check for in the kitchen would be a working refrigerator and clean and empty cabinets. For each room reviewed, there should be an area to identify any needed repairs or improvements. The move in checklist can also inform tenants on items such as setting up utilities, managing pets, and throwing away trash.

There are checklist-related tools available for landlords and tenants. For example, Zillow offers a downloadable check list. And landlords can use RentalIncomeExpense.com to track expenses related to agreed upon repairs and improvements.

Categories
Landlord Taxes

Schedule E for Rental Property

Schedule E
Landlords need to file a schedule E with their form 1040 every tax year to report income (or loss) from rental property.

Schedule E is one of the many schedules that are part of the IRS form 1040. Taxpayers use Schedule E to report income and expenses from supplemental income. In contrast to earned income, supplemental income is not received through employment. Examples of supplemental income include rentals, royalties, and income from S corporations and partnerships. Landlords need to file a schedule E with their form 1040 every tax year to report income (or loss) from rental property.

Income on Schedule E

Schedule E is organized into five parts. Part I is the section focusing on income or loss from rental income. In this section, the primary income to complete falls on line 3: “Rents Received”. On this line, landlords report the rental income received from tenants for each identified property.

Expenses on Schedule E

To complete schedule E, landlords need to classify expenses based on 15 categories provided by the IRS. These expense categories include advertising, cleaning and maintenance, and insurance, just to name a few. In contrast to the simplicity of the rent reporting line, for expenses, landlords need to select a category for each expense for each property.

Completing schedule E is reasonably straightforward. In fact, it becomes very easy to complete if landlords use accounting software to track rental income and expenses. One in particular, RentalIncomeExpense.com, provides a schedule E helper report that mimics the schedule E. At tax time, landlords can provide this report to accountants for easy tax preparation. Best of all, RentalIncomeExpense.com is free!

Categories
General

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.