Rental Property Accounting Basics

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Do you own a rental property or even a portfolio of them? Do you use a rental property accountant or leave your administration and bookkeeping to chance? For many property investors, day to day bookkeeping and administration is something that is often overlooked.

Like most investments, having good accounting processes is essential to keep track of income and expenses. But just as important, investors can quickly identify missed rental receipts and evaluate their return on their investments.

Many investors know the importance of knowing a few basic accounting terms. They also know that efficient accounting processes give them more time to focus on higher value tasks.

Rental Property Accounting

It’s useful for rental property investors to familiarise themselves with the differences between bookkeeping and accounting.

Bookkeeping is the process to record and categorise financial transactions. Accounting is the process that analyses this information to report a business’ (or a rental property’s) financial performance.

If you own or manage rental properties, you’ll need to decide how you’ll keep up to date with your income and expenses. How will you manage your tenant’s payments? How will you manage your rental property agent’s invoices or receipts for repairs and maintenance?

Staying on top of your rental property accounting is not difficult with the right processes
Staying on top of your rental property accounting is not difficult with the right processes

Staying on top of your rental property accounting is not difficult with the right processes. Follow these tips to help implement a simple bookkeeping and accounting system.

  • Separate rental property income and expenses from personal ones.
  • Open separate bank accounts for each rental property.
  • Use a virtual bookkeeper and accounting software to record and track income and expenses.
  • Plan for irregular or annual payments.
  • Add an experienced rental property accountant to your team to structure and optimise tax planning opportunities.

Separate Rental Property Income and Expenses from Personal Ones.

Successful rental property entrepreneurs don’t mix personal income and expenses with their properties’ transactions.

Ask your bank to open a separate bank account for your rental property. Open up a savings account and set aside money for future rental property expenses.

Do you know how you’ll pay for unexpected repairs during a bad winter? How will replace a number of appliances at the same time? As chattels depreciate, set aside a percentage of your rental income every month to provide a buffer.

As your portfolio increases, open separate bank accounts for each rental property. This’ll make it easier to establish and compare their financial performance and the returns they provide you.

Record and Track Income and Expenses

As mentioned earlier, many rental property investors overlook the importance of recording income and expenses. It shouldn’t be confined to an annual exercise for your rental property accountant.

If you have only one rental property, a simple spreadsheet might be enough. Talk to your chartered accountant. If you have more than one, considering using good cloud based accounting software. This’ll help you track your income and expenses in real time.

And cloud accounting software is regularly updated to comply with IRD’s rules and accounting best practices. It’ll also make tax season easier. Ask your virtual rental property accountant to enter your bank and credit card transactions and prepare financial reports for you to review.

For less than the price of a round of drinks, they’ll quickly free up your time so you can focus on other things. You’ll also be able to provide your rental property accountant with their own login. They’ll be able to collaborate with you throughout the year and provide advice and support.

Consult a Qualified Rental Property Accountant

Engage a rental property accountant to help safeguard your assets.

An experienced chartered accountant and tax advisor will be a valuable member of your team. They’ll help set up the right structures, explore tax planning opportunities and analyse your portfolio.

Choose one that has their own portfolio of rental properties. When done properly, rental property accounting offers many benefits to busy rental property investors. Benefits include saving time or tracking performance by outsourcing routine tasks to a virtual rental property accountant.

Additional benefits will include protecting your assets if they are optimally structured. If you invest in rental properties, always consult with an experienced rental property accountant. If you choose wisely, you’ll quickly be able to focus your energy and effort in other activities that benefit your bottom-line.

Whether you choose to do your own accounting or engage a rental property accountant, I’d welcome your comments below.


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  • Annie Jones

    15/06/2019 - 7:38 am

    Well, That was really helpful ! I’m quite new to rental property accounting and I was a bit lost with all the terms and all. I think consulting a rental property accountant is a very good option for beginners.

  • Victor

    15/06/2019 - 8:38 pm

    A few years back I wouldn’t have said this but now I strongly believe anyone involved in the rental market needs a qualified rental property accountant. You can’t live without one and you shouldn’t settle for a bad/unprepared one. Just my 2 cents.

  • Dylan Alvarez

    17/06/2019 - 8:56 am

    Just started renting. Your article about Rental Property Accounting is extremely helpful. Concise and to the point. I like that. Keep it up, you’re doing a great job!

  • Martin D.

    17/06/2019 - 10:48 am

    I agree with you, Victor. I don’t like to lose money because of a poor rental property accountant. I unfortunately had to learn this the hard way and lost a lot of money before realizing it. Well, like the saying goes: “You either win some or you learn some”.

  • Andrew

    18/06/2019 - 11:17 pm

    Your article is so spot on, Mark. It took me a LONG while to figure out how important it is to separate rental property income and expenses from personal ones. I wonder why it took me so long. This is a huge mistake I wish I hadn’t made.

    • Mark

      18/06/2019 - 11:52 pm

      Thank you for your kind comments Andrew.

  • Alexandria Canchola

    08/07/2019 - 6:31 am

    Really great information, thanks for the share and insights! I will recommend this to my friends for sure.

  • Rowena Brandow

    16/07/2019 - 11:48 am

    Great info, thanks for the share!

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