What year do I count income for?

Question

My tenant paid a portion of their rent for December on 12/31/24 (late). I use apartments.com, so the money didn't end up in my account until 1/6/25.

Is this considered income for 2024 or 2025?

Linda Weygant · Answer

I think you've forgotten about the concept of Constructive Receipt.  If/when a taxpayer's agent (which is what Apartments.com is) receives funds, that is considered to be constructive receipt to the taxpayer.  A cash basis taxpayer will recognize income when they or their agent receives the funds.

Jason Malabute · Answer

For tax purposes, rental income is generally recognized in the year you receive it, not when it is paid. Since the payment was deposited into your account on 1/6/2025, it would typically be considered income for 2025, even though the tenant paid it on 12/31/2024.

However, if you use cash-basis accounting (which most landlords do), the key factor is when you physically receive the money, not when it was sent or owed. Best way is to consult with a tax advisor to ensure compliance with IRS guidelines.

Sean O'Keefe · Answer

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*This post does not create a CPA-client relationship. The information contained in this post is not to be relied upon. Readers are advised to seek professional advice.

Charles Perkins · Answer

If I understand you correctly the tenant paid on 12/31/24 on the apartments.com app.  The funds were available for you on 1/6/25.  If this is the case you had constructive receipt as of 12/31/24 when payment was made. This makes it 2024 income.

Andrew Katz · Answer

Looks like I need to talk to my accountant, but I was hoping to have this squared away before talking to him.

I realize I also have this problem with my property manager. The dates in the ledger do align with the bank account.

Simon W. · Answer

this is where the gray area comes in with accounting. And people think Ai is going to replace accountants.

one can argue that apartments.com is just a processing the payment and not actually holding the funds to transfer out.

If apartments.com all of a sudden reverses the payment for insufficient funds?

Of course the OP received the funds but the point I would argue is that if the OP received in Jan and not Dec in his bank account. It would be Jan income.

He only knows about it, but if an accountant is just running his books on QBO or another platform and only connect with the feeds. The accountant would record it as of Jan and not Dec. 90% of the real estate investors are running cash-basis. To record it as December, you would have to back date it and the bank reconcilation would be off.

Ashish Acharya · Answer

@Andrew Katz Since you're likely using the cash basis of accounting, income is recognized when you actually receive it. Although the tenant initiated the payment on 12/31/2024, the funds didn’t reach your account until 1/6/2025, making it 2025 income. Keep records of the payment timing to substantiate your reporting if needed.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

Simon W. · Answer

It is most likely 2025 income. It depends what basis you are filing under. If you had to ask this, it is most likely 2025 lol

What year do I count income for?

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