Question on Bookkeeping for Rental Properties

[Kole Kingslien]

Hi Everyone,

I am hoping that there is someone with experience who can help me out. 

I currently have one rental property (in the middle of buying my second right now), and have some questions about bookkeeping. My questions are:

• Should I keep a separate income/expense spreadsheet for each property (and should I include mortgage principle in those spreadsheets, or would a CPA rather me leave it out?)?
• Should I organize my receipts by property, or is it fine to keep them all in one folder?
• I also keep a mileage log, should I organize the miles I drive by property, and include them on the spreadsheets, or can I just keep a general mileage log?
• I also have expenses that are not related to particular properties, should I keep a separate spreadsheet for these expenses? (Direct mail marketing, inspections on properties that I don't end up buying, miles driven to look at potential properties or meet with potential sellers, and so on)

I am still new to investing and bookkeeping, but I want to make this as clean and simple as possible for myself, and a CPA when the end of the year comes around.

Thanks,

Kole

[Ashish Acharya]

@Kole Kingslien ,

1 - Schedule E of Form 1040 indicates that each property is to be shown separately.  Likewise, the instructions to Form 8825 state that each rental property is to be shown separately on the Form 8825, even if the activities are combined for purposes of the passive activity rules. So you or your bookkeeper should keep them separate.   Your Tax CPA is not going to separate them out unless he.she does your bookkeeping. 

2- With receipt, please dont put in in any physical folder. You can actually take a pic and your QuickBooks will automatically link it to the property it is for, Or, use the various apps such as Receiptbank or dropbox. Some of the apps directly talk to bookkeeping software so you dont have to worry about them at the year-end. 

3- Use apps lie Miles IQ to track and it can be divided between properties. 

4- Divide the expense between properties. 

Bookkeeping will take your valuable time if you are not an accountant. Better outsource it.