RE: Separate account for rental income and expense
Also, if you have any tips or advice to share about handling the financial aspects of a rental property I would appreciate learning from you experiences. I just don't want to make any mistakes and have surprises come tax time or when the banks ask for documentation. I am keeping receipts and paper trail of everything and for now, the renter will mail me a the monthly rent checks advance.
Posted by
D C, NV
on
Tuesday, January 8, 2013
RE: Separate account for rental income and expense
You should have a checking account dedicated for your rental property (let's call it CK #1). If not, you really need to open a account and name it "Property Investment" for all your property. You should not mix personal and business accounts. If you do, the IRS is have fun with you and may disallow expenses, etc. Consider the following - Open a second checking account (CK #2) for tenant rent deposits. When you are satisfied that checks deposited have cleared, transfer them into CK #1. Reason being, security since you're giving strangers an account # to make deposits. You never know. Keep a minimum amount ($20 ??) in CK #2 to keep it active. Always use CK #1 for paying expenses that are property related only. -----Disclaimer: Since I’ve been answering a lot of questions, I thought I would make the following statement. I’m not affiliated with EZlandlord Forms. I’m just here (not sure how long) to help those that have questions. Having 40+ yrs with Rental Property and done well, it’s my way of “Pay it Forward (check out the movie).” However, it is up to you to become familiar with your State/Local laws. I always like to know if the suggestions I offer are helpful. Feel free to comment anytime. Thanks in Advance. BTW...check out the Rental Property Organizer at Simp-List.com. Free Trial Download with data.
Posted by
Bob R, CA
on
Tuesday, January 8, 2013
RE: Separate account for rental income and expense
That makes sense. Thank you Bob. I'll do that.
Posted by
D C, NV
on
Tuesday, January 8, 2013
RE: Separate account for rental income and expense
I always collect checks and deposit them into my own (separated) bank account. I don't give tenants access to my bank account.
Posted by
Dawn A, WI
on
Tuesday, January 8, 2013
RE: Separate account for rental income and expense
@Dawn: That's why you set up 2 accounts. 1 for deposits with a balance of $20 after moving deposits into the main account used to pay bills, etc. both are used for rentals only. Word of caution – don’t transfer until you know all checks cleared. This way when tenant makes a deposit, you will see it on line immediately. Also, they can't say "It's in the mail." Been doing this for years and never had a problem. I got tired of waiting for all checks to arrive or making several trips to the bank. . -----Disclaimer: Since I’ve been answering a lot of questions, I thought I would make the following statement. I’m not affiliated with EZlandlord Forms. I’m just here (not sure how long) to help those that have questions. Having 40+ yrs with Rental Property and done well, it’s my way of “Pay it Forward (check out the movie).” However, it is up to you to become familiar with your State/Local laws. I always like to know if the suggestions I offer are helpful. Feel free to comment anytime. Thanks in Advance. BTW...check out the Rental Property Organizer at Simp-List.com. Free Trial Download with data.
Posted by
Bob R, CA
on
Tuesday, January 8, 2013
RE: Separate account for rental income and expense
You definitely want a separate account for the property and for the deposits. You also want a method of tracking the incoming payments (not just by using the bank statement). The deposits account can sit out there and just "be" since you will only be making transactions on it one or twice a year. The rents account is a way for you to segregate income and expenses related to the property. You should never, ever commingle rental income with your own money. It gets messy. Additionally, sometimes you have to make a purchase or repair with a credit card. By having the separate rents account you can show that you paid the credit card charge with money from that account that was not your money. See how it works? It's a bit of extra accounting but it will pay off in the end.
For taxes (although I am not a tax expert) you will want to keep track of how many days you rented the property at fair market value versus how many days it was empty. You will want to track all of the rental income, all repairs or expenses, etc, to make sure you file correctly. If you only have one or two properties you don't even really need a tax specialist but if you get more properties or if you just want to feel comfortable the you should consider an accountant experienced in rental properties (NOT Jackson Hewitt or Liberty Taxes since they may not be the most trained).
Posted by
Christian S, VA
on
Sunday, April 7, 2013
RE: Separate account for rental income and expense
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Posted by
sakthi v, IN
on
Sunday, October 6, 2013
RE: Separate account for rental income and expense
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Posted by
sakthi v, IN
on
Sunday, October 6, 2013
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