Just bought an investment property. Before you know it, tax season will be fast approaching. I just want to know how do you savvy investors keep track of your expenses? Any tips? Thanks...
@Account Closed Cutting your grass up to removing a light bulb on the ceiling write down all your expenses or type them on excel and hand it to your tax preparer to use it as an expense.
When it comes to transactions for your rental property, you’ll want to record everything on a spreadsheet and (once you scale up) potentially on accounting software like Quickbooks Online.
Keep electronic copies of your invoices and receipts and make sure your are running everything through a bank account designated solely for the rental.
When it comes to tax preparation, you may want to consult with a CPA about how to best be prepared for that.
Congrats on purchasing an investment property!
You are not required to maintain a separate bank account(if you purchased property in your name), however, it would be very useful to maintain a separate bank account for your personal activities and your rental activities.
The reason for this is that at the end of the year all your income and expenses are grouped under one account instead of having to go through all the transactions in your personal account to see which was related to your rental.
You should have the ability to export your monthly bank statements to Excel. If you have this feature - I would recommend putting a description next to each bank transaction. Each Transaction will label what that amount was for ex. Rental income, real estate taxes, mortgage interest, insurance, repairs etc.
You may find it beneficial to acquire an accounting software(quickbooks, xero etc) when you acquire more properties.
Excel. Keep track of everything and they’ll decide if it can be deducted or has to be depreciated. I would consult with accountant soon, there may be decisions you make (I.e to repair something instead of replace it) that can benefit from their input.