Why rental property owners need different books
Rent from several tenants, a mortgage where only the interest is a cost, repairs that might be improvements, deposits you're holding, and a building that's written off over decades but the land never is. Rental books are mostly about telling those apart.
What a bookkeeper for rental property owners keeps track of
- Rent received from each tenant, and who's late
- Mortgage interest apart from principal
- Repairs apart from improvements
- Tenant deposits held
- Depreciation on the building
In the US
- Rental income and costs go on Schedule E.
- Residential buildings are depreciated over 27.5 years; land isn't depreciated.
- Repairs are written off now; improvements are depreciated.
In Canada
- Rental income goes on form T776.
- Buildings are claimed through capital cost allowance, usually class 1 at 4%, and CCA can't create or grow a rental loss.
- Residential rent is exempt from GST/HST.
What SumSwift does for landlords
- A rent roll matching each tenant's payments, with late rent flagged
- Mortgage interest split from principal
- "Repair or improvement?" asked once for big costs
- The T776 with CCA (Canada) for each property, co-owners included
- Tenant deposits tracked as held
- Every statement checked against the balances your bank printed, to the cent, with personal spending kept off your profit