You will hear arguments on both sides of this. Conservative view is to keep everything seperate, and if you plan to hire out tax services they will appreciate that. But all of our rental revenue and costs are co-mingled with our normal lives, except for the security deposits which are required to be segregated. We are both in finance/accounting so we are diligent enough to sort the activity and retain receipts. We do have a seperate account that tenants use when they go to the bank to deposit rent, for those who elect that option. Many mortgages require accounts with their banks/credit unions, so we take advantage of those extra accounts and that becomes the rental reserve fund, but it is so easy to transfer money that you just need to figure out what works best for us. We find plenty of ongoing costs to put on a credit card (landscaping and utilities being the most recurring), but we use our primary card to consolidate the rewards.
I currently have a duplex that I house hack. To make things easier I set up a separate checking account to put rent in and pay the mortgage out of. I also did get a separate credit card to use just for house expenses.
This makes it a whole lot easier, especially if you misplace a receipt when doing taxes. I know everything on my credit card is house related. One thing to factor in is how much you can write off for certain expenses. Keep track of what items are purely for the rental unit and what items are for both units.
If it's an item that is technically for improvement of the whole house (landscaping, common area improvements, exterior siding/painting) you can only write off a portion. You'll have to figure out the percentage of the livable space is rented. In my case the rental unit is approx 33% of the homes square footage so I can only write off 33% of those items. If it's just for the rental unit you can write off 100%.
If it's an improvement to your unit keep it separate and not on the rental credit card or at least keep track of it.
As a plus, I use my rewards as a check to myself every now and then and put that towards the mortgage/investment account. I don't know how it would work using "$100" in rewards to buy something for the rental unit and if I could write that off.
Thanks for the reply! So it is recommended to pay everything related to the rental business like paying attorney, agent, property manager, etc from a dedicated/separate credit card....Any other advice or take on this matter is appreciated as well.
I agree with @James Mcsweeney I use a debit card, but it's all the same. I have two accounts for my rentals, one is the operating account (Checking Account that has the debit card and I use it for repairs, management fees, etc.), and one holds the security deposits (Savings Account - no card, but it is interest bearing). If you have more than one property, it will be important to track which expenses go to which property for tax time. This is why you will hear some people creating new accounts for each rental they have, but as long as you are able to code each expense you make, with the property it belongs to, two accounts should be enough.
I don't use a business accounts, and don't know what the benefit would be, other than establishing credit in your company's name.
I use my debit card to pay for everything. Sometimes if it's a large expense, I will write a check, but it all comes from my rental Checking account.
There aren't many expenses you can use your card for besides at the time of renovating the property. I feel its just an extra hurdle at the time of bookkeeping to account for the CC. You have the bank account so that should suffice.
You will hear arguments on both sides of this. Conservative view is to keep everything seperate, and if you plan to hire out tax services they will appreciate that. But all of our rental revenue and costs are co-mingled with our normal lives, except for the security deposits which are required to be segregated. We are both in finance/accounting so we are diligent enough to sort the activity and retain receipts. We do have a seperate account that tenants use when they go to the bank to deposit rent, for those who elect that option. Many mortgages require accounts with their banks/credit unions, so we take advantage of those extra accounts and that becomes the rental reserve fund, but it is so easy to transfer money that you just need to figure out what works best for us. We find plenty of ongoing costs to put on a credit card (landscaping and utilities being the most recurring), but we use our primary card to consolidate the rewards.