Simply put, yes, QuickBooks does have the capacity to be used for managing rental property accounting transactions. The software lets you set up properties as customers, tenants as sub-customers, and classes to track various transaction types. Track your rental property income and expenses to streamline the accounting process. Rent payments and maintenance costs are automatically uploaded to federal sales tax deduction your accounting dashboard to make it easier to see how much money is coming in and out. Programs like Excel, Numbers, Google Sheets, and OpenOffice can be used to create a basic real estate bookkeeping system to track income and expenses. However, even with one rental property, keeping information updated manually can become tedious and it’s easy to have something fall through the cracks.

Furthermore, it integrates with other common programs and can be learned by landlords with little accounting experience while still meeting the needs of more advanced users. Property Matrix serves accountants, investors, and property managers through its numerous affiliates, such as the National Apartment Association and the American Apartment Owners Association. Designed for users of all levels of accounting experience, Property Matrix is a website-based software equipped with powerful and advanced features that have automation capabilities for expert users. Furthermore, all features are fully customizable, allowing experienced users to pick the top-of-the-line accounting features they need to improve their reporting efficiency.

  • Having a CPA or accountant file your annual tax returns can be worth the cost.
  • A good real estate bookkeeping system makes opportunities like these easier to see.
  • However, setting up a strong rental property accounting system is a must to run a well-oiled real estate business and make sure you get the most out of your investments.
  • Doing so will make rental property bookkeeping a lot easier and more accurate.
  • All of these are expenses that the landlord must pay for and keep records of.

Here’s a detailed overview of the best accounting software solutions for landlords. Find the one that suits your particular needs, budget, and investing experience. While your rental property is considered an asset, the income you derive from it is not.

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Or, you may need to install a new HVAC unit next year, so you can set aside a small percentage of your rental income each month to fund a CapEx (capital expenditure) account. For example, if you bill the tenant for $2,000 in rent in June but the tenant doesn’t pay, you still have income and a receivable of $2,000 based on the accrual method. If you receive $1,500 in bills for the month but don’t actually pay them until July, you still have an expense and payable amount of $1,500. Digitization will help you declutter your office, stay on top of your invoicing and even contribute to saving the planet. If you’d like to share data with professionals across your team, cloud-based software may be your best option.

  • By understanding industry-specific aspects of rental accounting, you’ll be better equipped to set up an accounting system that makes managing your business’s finances easier and more efficient.
  • Landlords have the ability to receive online payments, screen applicants, manage finances, and get a free listing website.
  • Finally, the leasing terms for residential rentals are usually shorter than those for commercial rentals.
  • While a basic worksheet for rental property accounting can be okay, it’s easy to forget to report income or double-count an expense, two innocent errors that can create problems with the IRS.
  • With a good bookkeeping software package, landlords can do
    this easily so their financial records are not only kept up to date but are easy
    to access for their accountant to file a tax bill.

An important application of rental property accounting is the use of past data to forecast future expenses. To prepare for fluctuating or unexpected expenditures, disciplined landlords and investors, will set aside a set percentage of their rental income into savings each month. For example, do you know what you will do when maintenance costs increase sharply in the winter? Setting aside these savings provides a buffer against derailing your finances. Over time, your historical financial data will help you forecast these costs with greater accuracy.

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But when it comes to rental property bookkeeping, there are a lot of details you need to keep track of. We reviewed 12 accounting software programs for rental properties before deciding on the seven best for these different categories. Lower costs and minimum fee requirements fared better than more expensive programs.

All of these are expenses that the landlord must pay for and keep records of. Once you have set up separate accounts for each of your properties, you will be ready to start tracking your expenses. First, you will need a reliable system for tracking the inflows and outflows of cash for your properties and your business overall.

The importance of rental property bookkeeping

Instead of scrambling to come up with the cash to cover a last-minute purchase, or even lost revenue from an owner who parted ways, keep a rainy-day fund. Look at your expenses over the previous year, especially the unexpected ones, and try to put aside enough money to cover similar costs for the year to come. Turn your receipts into data and deductibles with our expense reports that include IRS-accepted receipt images.


FreshBooks is an all-in-one accounting solution that manages all your bookkeeping needs, from creating professional invoices to tracking your business expenses and accepting rent payments. Most property managers use cash-basis accounting, but you have to be careful not to lose track of revenue and expenses as they occur. That’s where property management bookkeeping services, and specifically property management accounting software comes in handy.

Using rental property accounting software can help you stay on top of bills and tax payments you’ve made, which can help you avoid any unexpected financial mishaps. Real estate investors usually use Schedule E (Form 1040) (Supplemental Income and Loss) to report income and expenses related to rental property. A good rental property accounting template categorizes income and expenses according to Schedule E to help make financial reporting and tax filing easier. As we’ll discuss next, the best rental property accounting system will automatically upload and sync income and expenses to help keep finances accurate and make preparing year-end tax reports a breeze. Rental property accounting works a little bit differently than accounting in other industries. For example, real estate investors use rental property accounting to ensure that adequate rental income is generated to pay expenses.

It’s capable of managing complex accounting processes, minimizing workload, and eliminating the need for third-party accounting software. It’s important to note that there is no specific version of QuickBooks tailored to the real estate or property management industry. Because of this, you’ll need to be fluid with the program and perhaps make a few tweaks and adjustments in order to have it work the way a property owner would like.

Rental property owners can use bookkeeping to their advantage to track the financial flows for each property so that they can fine-tune their operations. From free trials and setup fees to monthly minimums and add-on charges, there’s a lot to consider on price alone. We researched the best accounting software for rental properties to help you compare functions and features, pricing, convenience, customer service, and more. Your tenants will receive an email from us with instructions for paying their rent, security deposit, or any fees using their bank account, debit or credit card. With cash basis accounting for property management, as long as you keep your business in the black, you’ll typically have a positive cash flow.

Whichever method you choose, the important thing is to be consistent in how you track your income and expenses. This will make it easier to spot trends over time and make sure that you’re keeping on top of your finances. Accurately keeping track of your income and expenses also makes it easier to plan for future expenses so that you have money in the bank when you need it.

Rental Property Accounting 101: What Landlords Should Know

In addition to an array of features such as automated late fees, smart bill entry, relaxed-time reporting, and utility management, it also offers free training and resources as well as customer support. Yardi Breeze also offers marketing listings, maintenance requests, and a platform for communication between tenants and landlords. For example, if you use a rental listing website to advertise and lease your property, that expense could be treated as an advertising or professional fee expense. Check with your accountant for the best practice, then be consistent with how you treat the expense each year you file Schedule E on your 1040 tax return.

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