Expense Tracking for Landlords

Expense tracking is not fun, however, I’ve come up with a few tricks to make it as painless as possible. I like to (I use that term loosely) do my books once per month. That way you are only spending a small amount of time at it, receipts are fresh in your mind and everything is organized for your tax professional. No matter if you use Excel, Google Sheets, Quicken or have a bookkeeper, you will need to enter some information.

Tax Deductions for Landlords

Let’s start off with the fun stuff. Make sure you are deducting the following on your taxes. No one is going to remind you to take your deductions (if your CPA is, please pass along their info to me) so make sure these make your way into your P&L.

1. Mortgage Interest
2. Property Tax
3. Operating Expense: Everything necessary to run your business. Did you happen to purchase an iPad, desk chair, power tool, or computer this year? It was for your business.
4. Depreciation: If you do not take this every year the IRS will assume you had and you will need to pay the recapture once you sell the property. Depreciation one reason why real estate investing so amazing so make sure you are taking what is owed to you.
5. Repairs: Make sure you are deducting any repairs that are made to the property. No matter if you paid a contractor or if you did it yourself. You can deduct your materials but not your labor.
6. Your Home Office: This is a tricky one so make sure you speak with your CPA but creating a home office will allow you to deduct a good amount of money each year.
7. Milage: Make sure you are tracking your mileage for everything you do for your properties. That includes swinging by to check on it/doing repairs/showing the property, grabbing something from Home Depot, etc.

How to Organize Your Receipts

The IRS has categories they want you to place each expense in. Make sure you are tracking each expense monthly into your P&L that is separated by each of these categories. You also need to keep your receipts (or at least a digital copy of them) for at least 7 years. I use the app Expensify although there are many out there. I take a photo of the receipt and categorize it each month. That way they are easy to find in case you need to. I also use this app to track or input my mileage each month.

While accounting is not any fun, it is a necessary evil and can save you hundreds or thousands on your tax liability. Do you have any hacks on tracking expenses or accounting? Let me know, I am always looking for new ideas.