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recording expenses

One of the major benefits of being a landlord is the tax deductions that you can take advantage of. However, these deductions aren’t always straightforward and at the end of the year filling out a tax return accurately to maximize the benefits associated with landlording can be time-consuming – especially if you haven’t got a landlord record-keeping system like Landlord Studio to store all your important documentation and track your income and expenses. 

Being organized, and staying organized throughout the entirety of the tax year will save you time, sanity, and money. 

Four Reasons to Keep Great Rental Property Records

  1. First and foremost, having detailed, well-organized accounts all in one place will make it easier and much quicker to file your taxes.
  2. Keeping accurate accounts means you won’t miss out on any deductions and won’t end up overpaying your taxes.
  3. It will help you file accurate claims as supposed to guesstimated ones. For example, instead of thinking that you paid a contractor around $1,000 at the beginning of the year, you will know that you paid them exactly $875 on January 20th.
  4. The IRS audits thousands of companies each year. If they have any questions about your tax return you will need proof to back up your claim. If you can’t come up with the proof your claim will not be honored, and you may need to pay extra in additional taxes and penalties.

What Records Should You Keep Track Of?

Everything. That’s the short answer anyway. 

The IRS is known for auditing small companies and ignorance is not an excuse. If you show losses for consecutive years you become even more likely to draw the attention of the IRS. Additionally, not all the auditing agents are fully aware of all the nuances surrounding real estate tax laws, making them more likely to question particulars in your claims than a regular business.

To be safe, you should have accessible records of everything.

Permanent Records

It’s not just expense receipts or rental income that a landlord needs to keep track of. There are also several documents that they need to file and keep indefinitely. A few examples of these documents are:

You can store all these documents securely as digital records in the Landlord Studio app. This allows you to do away with endless cabinets of files and shoeboxes of receipts. Instead, everything is neatly arranged inside the app by organization, property, and lease.

Download Tracking Expenses Guide
files to keep as a landlord

Deductible Landlord Expenses

Every landlord needs a good system to track their rental expenses. Some examples of deductible expenses that you need to keep detailed records of include but are not limited to:

  • Advertising costs for your property. For example, your listing fees on websites such as Zillow. Or agency fees if you employed an agency to find tenants for you.
  • Professional fees. Eg. your accountancy fees, Landlord Studio costs, legal fees such as legal documents, or consultation from Rocket Lawyer’s service.
  • Office expenses such as a second phone for business use or office supplies.
  • Repairs and property maintenance performed.
  • Travel expenses. For example, gas bought for journeys too and from your investment property for maintenance or routine inspections.
  • Utilities – if you are paying the utility bills these are a business expense. If these expenses are passed off to the tenant these can be marked in the Landlord Studio app as payable by the tenant.
  • Employee wages.
  • Property depreciation.

Please note that allowable deductibles vary widely depending on your location so we advise you to seek qualified advice from a licensed professional to determine what is an allowable expense for your particular scenario.

In addition to tracking these key rental expenses with a quality industry-specific rental property expense tracker like Landlord Studio, but landlords should keep detailed records of all income. 

Read our article Tax Deductible Expenses for Landlords for more information on key deductible expenses.

What To Look For In A Rental Property Record Keeping Tool

As part of our mission to improve the lives of landlords and tenants through innovation, we have spent a lot of time optimizing the income and expense tracking in the Landlord Studio software based on user feedback.

Our landlord app makes it easier than ever to not only store relevant documents and record your rental income, but also to keep track of and organize all deductible expenses. You can set recurring expenses, create rent reminder emails, smart scan receipts, and let us not forget the professional reports that landlords can generate instantly.

Do away with your excel spreadsheets and boxes of receipts. Instead, let Landlord Studio look after all your bookkeeping needs.

track expenses with landlord studio

Smart Scan Receipts

A feature we released at the beginning of 2020, a smart scan allows users to take a picture of their receipts which is stored in our secure cloud server for future reference. The software then automatically lifts and enters the details of the receipt as your expense.

Reconciling from Your Bank Account 

Another feature we developed upon popular user requests. This feature allows you to connect your bank accounts to your Landlord Studio account. You can then access your bank account transactions and reconcile income and expense transactions inside the app

For example, you pay $100 for property maintenance. Open the app, go to bank feeds, tap on the outgoing expense, hit reconcile, select the relevant property, and save.

Note: This feature is currently available in the US only but will be rolled out to other countries as we get the green light from regulating bodies.

Manually Enter Expenses

Alternatively, you can enter your expense details manually. This can be done for any expense. However, it is particularly important for the two following reasons: creating recurring expenses in the app, and creating expenses that are payable by tenant.

Set up Recurring Expenses

For recurring expenses such as mortgage payments, so that you don’t have to enter them every month you can set it to automatically recur saving you time and removing any potential human error. 

Payable By Tenants

Not all of the property expenses are the landlord’s responsibility. Some expenses will need to be passed onto the tenant. For example, any damage that goes beyond normal wear and tear would be a tenant’s responsibility. 

What expenses can and can’t be passed onto tenants varies from state to state and from country to country so please check with your local laws and regulations.

Generating Reports

Of course, all this tracking of income and expenses is only as good as the data and reports that you can get out of it at the end.

We have several professional reports available across devices. Popular reports include our:

Mobile First

A key benefit of Landlord Studio over other software on the market or even over your trusty spreadsheet is that users can access their account on any device. This means you can update your accounts anywhere at any time.

You can snap a picture of your receipt in the hardware store parking lot and have your accounting done before your seatbelt is even on.

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The Right Rental Property Expense Tracker

Having a quality rental property expense tracker will help you save time and enable you to maximize your landlord expense deductions.

Tracking your rental property expenses is easy with tools like Landlord Studio. Landlord Studio allows you to connect your bank account to reconcile expenses from inside the app, digitize receipts at the point of sale, and even automatically track income using our online rent collection feature. Plus with our professional reporting, you can instantly generate any of over 15 accountant-approved reports to gain nuanced insights into the performance of your portfolio to spot discrepancies and maximize cash flow. 

Expense TrackingLandlord AppProperty Management AppTax Deductible Expenses

Ben Luxon

Ben is the editor and lead writer for Landlord Studio. He has worked with real estate professionals all over the world and written educational articles on tech, real estate, and financial growth for sites such as Forbes, NARPM, and Business Magazine.

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