Do I need a separate bank account

[Cerise Goldberg]

Hi, I just bought my first rental property. Do I need a separate bank account?

[Bill Crow]

@Cerise Goldberg

Yes... and here are a few reasons why:

1. Security deposits. Deposits are typically required to be held in separate accounts from all other funds. Know your state and local laws on this. There may even be rules as to who gets the interest if deposits are held in an interest-bearing account.

2. Taxes. Keeping your rental income and expenses separate will make your tax accounting much more manageable.

3. Your own benefit. You will never be able to tell with certainty whether your rental is profitable or not if the monies are commingled with your personal funds.

I am keeping the comments very basic here, but wanted to give you more than just another “yes”. There should be other threads with greater depth on this subject here at BP.

Keep good records. The time spent is well worth the effort. The more you expand your business, the more important it becomes. Build good habits from day one.