If you’re new to property investing and curious about the ins and outs of rental property expense tracking, you’re not alone. The Property Management Coach can show you the ins and outs of property investing and management in just a few days! Further, within this article, you’ll find a list of the most common rental property expenses that you can expect to face and ideas for ways to track your expenses — even if you’re not an accountant or are horrible at math.
Most Common Rental Property Expenses
Some of the most common rental property expenses are repairs, mortgage interest, operating expenses, depreciation, and property taxes. Thankfully, these expenses are all tax-deductible.
However, the IRS states that the cost of improvements is not tax-deductible unless the improvements are restoration, adaptation, or betterment of the property. This is where claiming depreciation is helpful. Form 4562 is used for reporting depreciation, and it can be used the initial year that you put the product on the rental market and any year that you make improvements on the property. Keep in mind that you can only deduct a percentage of your rental property improvements.
How to Track Rental Property Expenses
Ensuring that you only deduct what you should is one reason an expense tracking software can be a vital tool in your business, and you have options when it comes to expense tracking software. One of these options is expense tracking software that provides tax penalty protection.
Suggestions for your expense tracking software
Fyle recommends a cloud-based software program that you can use to keep track of charges and scan receipts. One cloud-based option for controlling your budget and tracking expenses is QuickBooks Online. All your needs will be covered with multi-app integration that mechanically synchronizes your business’s economic data and management systems. Also, it affords agencies rapid and handy receipt scanning, automated categorization expense tracking, and multi-user competencies for complete financial management.
What’s even better is that this payroll and accounting software often has other vital capabilities for your business. Some of these include:
- automatic expense categorization
- financial responsibility-sharing across teams
- quick employee reimbursement
- receipt scanning
- automatic expense importing
- progress invoicing
- mileage tracking capabilities
- multi-user functionality
- data security
- error elimination
- seamless collaboration
- advanced analytics
- mobile access
- import and integration functions
If you want to keep it simple and use a tool that provides exceptional value, look for a platform that offers automatic payroll scheduling, automatic calculating and tax filing, and same-day direct deposit. The fact is that life can get in the way sometimes. Unexpected emergencies can pop up at any time, and it’s difficult to remember everything that needs to be done. However, your employees are one of your most valuable assets and should be treated as such. That’s why using software that ensures they get paid the right amount at the right time is crucial to your business.
The key takeaway is to find software that can provide you with the benefits you need in your business, ensure accuracy in calculations, protect you from IRS penalties, and provide a better payday experience for your employees and vendors. When you find a solution that is that variable and reliable, you can be sure that you are tracking your rental property expenses like a pro — even if you’re not a math whiz!
Just getting your feet wet in rental property management? Let Kathleen, The Property Management Coach, help you like she’s helped countless others! Call (800) 475-3084 to get started.
Contributing Author, Katie Conroy is the creator of AdviceMine.com. She particularly enjoys writing about lifestyle topics and created the website to share advice she has learned through experience, education, and research.