Rental Property Bookkeeping, Simplified: What You Really Need to Track (and What You Don’t)
- Nelisa Lee
- Sep 4
- 3 min read
If you own rental property, chances are you didn’t get into real estate because you love spreadsheets and accounting software. But the truth is, messy books can quietly drain your profits and create unnecessary stress - especially when tax season rolls around or you’re trying to figure out if a property is actually cash flowing.
The good news? Bookkeeping for rentals doesn’t have to be complicated. In fact, most investors are tracking way more than they need to—or focusing on the wrong things altogether.
Let’s simplify it.
✅ What You Do Need to Track for Rental Property Bookkeeping
Here are the essentials every rental property owner should keep tabs on:
1. Rental Income (by property)
Keep a clear record of when rent was received, how much, and which property or unit it came from. Ideally, you’re using software (like Stessa or QuickBooks) that lets you categorize income per property.
📌 Tip: If a tenant is late or short on rent, note it in your books—even if you’re still expecting it to come in.
2. Mortgage Payments
Break these out into:
Principal (this adds to your equity, not a deduction)
Interest (this is deductible)
Escrowed amounts (for taxes and insurance)
Your monthly mortgage statement usually shows the breakdown—log it correctly so your reports make sense.
3. Repairs & Maintenance
These are typically tax-deductible in the year paid. Keep track of:
Minor repairs (leaky faucet, broken blinds)
Lawn care or pest control
Emergency fixes (like HVAC repair)
🛠️ Note: Keep receipts and be clear on whether an expense is repair or capital improvement (more on that below).
4. Property Taxes & Insurance
If paid through escrow, you’ll see these on your mortgage statements. If not, track them separately. These are deductible expenses and should be categorized clearly.
5. Utilities (if you pay them)
Some landlords cover water, trash, gas, or electricity. If so, record the payments—and again, categorize by property if you own more than one.
6. Property Management Fees
Whether you use a full-service PM or pay someone to handle leasing and tenant calls, these fees are deductible and should be tracked separately.
7. Legal & Professional Services
This includes things like:
Bookkeeping and accounting
Legal fees for evictions or lease drafting
Consulting for investment decisions
❌ What You Don’t Need to Track (in excruciating detail)
Let’s free up some brain space. Here’s what you don’t need to worry about tracking line-by-line:
✘ Every $2 coffee on the way to the property
Unless it’s part of a travel meal while visiting an out-of-state rental, the IRS isn’t expecting a line of coffee receipts for your business. Travel meals? Yes. Starbucks every time you leave the house? Not necessary.
✘ Home office deductions (if they’re hard to justify)
Unless you use a dedicated portion of your home solely for real estate and track it appropriately, many landlords find the home office deduction to be more headache than it’s worth.
✘ Super granular categories
You don’t need 12 categories for “Repairs.” If you’re using bookkeeping software, keep it clean. For example:
✅ “Repairs & Maintenance”
✅ “Capital Improvements”
✅ “Contractor Labor”
No need for:
🚫 “Faucet repair - kitchen”
🚫 “Yard work - spring”
🚫 “AC – upstairs unit – July”
Keep it simple.
✘ Personal expenses mixed with business
Seems obvious, but even one Target run where you bought toilet paper and tenant welcome baskets can make reconciling miserable. Use separate cards/accounts when possible.
🌿 A Better Way to Think About It
Instead of trying to track everything perfectly, focus on what your numbers are telling you.
Ask yourself:
Is each property cash flowing?
Are expenses creeping up year over year?
What’s my return after all costs?
Bookkeeping isn’t about the bookkeeping. It’s about giving you clear answers, so you can make better investment decisions.
Want a Head Start?
If you’re still feeling stuck, here’s how I can help:
🧾 Take the Rental Owners Accounting Course – Learn how to set up your books right from the start.
📋 Need cleanup? – Our Weed Out Service tackles messy books and gets you on track.
📬 Too busy? – We offer done-for-you bookkeeping so you can focus on investing.
Final Word
Rental property bookkeeping doesn’t have to be a nightmare. Track what matters. Ditch what doesn’t. And set your systems up to work for you—not the other way around.
Because clarity isn’t just about taxes—it’s about growth. 🌿
