Tracking Expenses with separate credit card for tax only

Tracking Expenses with separate credit card for tax only

Derek LarsonPro Member
Investor · Traverse City, MI · Member since 2019 · 58 posts · 12 votes

I just got done listening to an episode on "Get paid for your Pad,"  They had a tax guy on there talking about tracking your deductions.  

1. Shoe box of receipts.  (not so good)

2. Spreadsheet (Better but messing and time consuming etc.)

3. Separate Credit card for all things deductible 

I land at number two, and try to save all the receipts in shoe box. I bought my STR late last year so I don't have much for taxes and I don't think my CPA will hate me too bad. But I would like to go the route of number 3. Especially since he said, you can make the decision at the register if this is for the rental or not. Then you could have this learn what items are then supplies or maint ect..
During peak it is easy with my PM buying all supplies ect.. but off season and shoulders we use it every other weekend, we are most of the time using the supplies and the off season guests, Cleaning, toiletries, coffee, etc.. Then it all separate from personal as well not intermixed.  

So... My ask is...  Does anyone use/recommend  a Credit Card that has a way to categorize purchases like this so I can track my expenses this way. 

Also, I still prefer to pay the bill from my main checking account then my separate rental account.  Does this matter?  I don't have to, just prefer.

Thank you.

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Natalie KolodijBusiness Member
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Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes
6y

You'll still need to categorize that spending into a spreadsheet. 


But I suggest this to people with bank accounts too. lots of bank accounts now have built in budgeting elements where you can create categories so you can track your spending. 

If you keep 1 account per rental and set up tracking categories to match Schedule E for your rental you can categorize them in the bank account and print out monthly summaries, year end summary. 

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  • Natalie KolodijBusiness Member
    Moderator
    Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes
    6y

    You'll still need to categorize that spending into a spreadsheet. 


    But I suggest this to people with bank accounts too. lots of bank accounts now have built in budgeting elements where you can create categories so you can track your spending. 

    If you keep 1 account per rental and set up tracking categories to match Schedule E for your rental you can categorize them in the bank account and print out monthly summaries, year end summary. 

  • Investor · brentwood, CA · Member since 2016 · 1k+ posts · 730 votes
    6y

    I do a spreadsheet (very simple), separate bank account and separate credit card.

  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    6y

    I have tried it and haven't found it to work that well. One day I will turn all of this over to an accountant but in the meantime I just spreadsheet it myself. Inevitably the expenses get mixed on different cards. 

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  • Encinitas, CA · Member since 2011 · 191 posts · 252 votes
    6y

    I use quicken (some use quickbooks)and set up tags for each property. That way at the end of the year, I can easily prepare a P & L for each property to give to my accountant for preparing my schedule E.

    With credit cards, I like to focus on the cards that give me the best rewards or cash back for my spending categories (This assumes you pay FULL BALANCE each and every month!). For instance, if you pay utilities, US Bank cash+ card allows you to choose categories that includes 5% cash back on utilities spending, $2,000 in spending max per quarter. Then I pay the credit card from the bank account associated with my rental. If I use a card for multiple rentals, I just pay pro-rata from each bank account and id the property for each payment within quicken.

  • Carl FischerPro Member
    Rental Property Investor · Ambler, PA · Member since 2015 · 2k+ posts · 1k+ votes
    6y

    @Derek Larson

    I use a credit card for each property and then the bookkeeper knows what class to put it under in QuickBooks- no spreadsheets just Quickbooks and credit cards. 

  • Michael PlaksPro Member
    Tax Accountant / Enrolled Agent · Houston, TX · Member since 2014 · 5k+ posts · 6k+ votes
    6y

    So if your own 15 properties, you carry 15 credit cards? And while at Home Depot, charge your shopping to 3 different cards? Standing at the checkout, carefully choosing the right card?

  • Carl FischerPro Member
    Rental Property Investor · Ambler, PA · Member since 2015 · 2k+ posts · 1k+ votes
    6y

    @Michael Plaks

    The card is given to the contractor or supervisor generally. Properties are scattered around the USA so it doesnt seem to be that big a deal. The location also helps identify the property. Amazon is a whole new story -matching location with credit card-it seems to be working out.  However it is a hassle holding all the cards for me personally as I keep the master of all the cards. I probably have made a mistake in the past but in reality it’s not that big a deal according to my CPA. As long as I’m not using it for personal use. Saves me time is the bottom line.  
    I also put all medical expenses on a separate credit card to track my HSA expenses. Bookeeper likes it. 

  • Derek LarsonPro Member
    OP
    Investor · Traverse City, MI · Member since 2019 · 58 posts · 12 votes
    6y

    Thanks all for the info.

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