If you own rental property, this spreadsheet is a must-have. Rental property income and expenses can be difficult to organize and track, especially if you wait until the end of the year. But with this spreadsheet, you’ll find it quick and easy to fill in information as you go.
We’ve organized the rental property spreadsheet to be an accountant’s dream. Expenses are organized according to the categories on the IRS Schedule E form. Enter expenses and income as they happen and then at the end of the year, simply hit “summary.” The spreadsheet does all the calculations for you and compiles them into a single page summary to hand to your tax preparer.
No more end-of-the-year scavenger hunts looking for loose receipts and trying to remember what you paid the plumber to fix that leaky toilet—at which property?
How to Track Rental Income and Expenses
The best way to track rental income and expenses is to record them in real time. For example, if you have a repair at your rental property, you should record the expense the same day you incur it. Rental income should also be recorded on the day it’s received.
By doing this, you won’t forget to enter information. You want to avoid entering all your income and expenses at the end of the year. Not only is that a lot of work, but it will likely result in numerous expenses being missed.
A spreadsheet is the best way to track incoming and outgoing funds. The most basic design would be a single-page spreadsheet with columns labeled date, amount, expense, and explanation. Come tax time, someone will have to go through all of these and put them in the proper groupings.
Or, you can use our Rental Income and Expenses Spreadsheet to track this information. The advantage of this is the detailed organization and heightened design. Our spreadsheet categories correspond to the IRS Schedule E categories, so you won’t have to try to sort that out at the end of the year. It breaks down expenses by month and automatically tallies them for an end-of-year summary.
What expenses can I claim for rental income?
The IRS says you can claim expenses which are “ordinary and necessary” in running and maintaining your rental property. This includes things such as travel to and from the property, mortgage interest, insurance, repairs, and other expenses directly related to your rental property.
However, you’ll want to ask your tax preparer to make the final determination of what can be considered an expense. Since you will likely only meet with your tax professional once a year, record anything you think qualifies. Then have your tax professional review your expenses at tax time.
If there’s something you included which can’t be expensed, you can easily remove it. It’s easier to remove an expense from your spreadsheet than it is to recall the expense and find the supporting documentation.
How do You Categorize Rental Property Expenses?
You should track all of your expenses in categories which align with those on the IRS Schedule E (Rental Income). If you track these throughout the year, filing annual taxes will be a breeze.
Our Rental Income and Expenses Spreadsheet Template makes it easy for you to track your expenses by these categories.
Here is a short explanation of each category:
Advertising: Actual advertising costs which are directly attributable to your rental. For example, advertising a vacancy.
Auto and Travel: According to the IRS, you can deduct ordinary and necessary auto and travel expenses related to the rental property. The rental property template calculates the standard mileage rate when you enter the miles driven.
For auto expenses, we choose to use the Federal standard mileage rate. Be sure to update this based on the current year’s rates. You can find the current rate at www.irs.gov.
Cleaning and Maintenance: Enter any cleaning and maintenance expenses, including things like cleaning between renters and snow removal.
Commissions: If you paid a real estate professional to rent your property, their commission is entered here.
Insurance: This is typically a landlord’s policy you hold for the property, and an umbrella policy if you have one.
Legal and Other Professional Fees: This is for tax advice and for a professional to prepare your tax forms for the rental property. This does not include other legal fees, such as those incurred to collect rent or other professional fees such as hiring an architect to improve the property. These types of legal expenses must be capitalized and added to the property’s basis. Refer to your tax professional for advice on this expense category.
Management Fees: Management fees include those charged by a management company, if you use one to oversee your rental properties.
Mortgage Interest Paid to Banks, etc.: Typically, this is the mortgage interest which is stated on form 1098, “Mortgage Interest Statement,” which you get from your mortgage company after the end of the year.
There are some additional rules if your real estate rental is in a trade or business, so check with your tax preparer to be sure you comply with those rules.
Other Interest: This is interest other than the mortgage interest which is incurred for the rental property. This could be for interest on other debts such as financing for appliances, or interest from financing of improvements.
Repairs: This is for repairs to the property done for maintenance. It does not include any improvements as these will need to be capitalized and depreciated. These will be recorded under the “Depreciation Expense” category below.
Supplies: Record costs for supplies required for the rental property, such as cleaning supplies, light bulbs, air filters, etc.
Taxes: Document any taxes you pay on your rental property, such as property taxes, rental licenses, and local taxes.
Utilities: These are utility expenses you pay which are not reimbursed by the renter. For instance, if you include electric, water, trash collection, etc. in your rental agreement and these are expenses you pay, record them here.
Depreciation Expense or Depletion: Enter any expenses which qualify for depreciation. Do not carry forward depreciation from previous years. Your tax professional will track this from year to year in your tax filings (it will be listed in your tax forms submitted to the IRS under the heading “Depreciation Detail Listing”).
Other: Here you list all of your other ordinary and necessary expenses which are not included in the previous categories. This can include the HOA fees paid, and other expenses you haven’t accounted for in the above sections.
What is Proper Rental Expense Documentation?
It’s very important to keep documentation related to all your expenses in case the IRS should ask for it. This includes receipts and statements of work. The easiest way to maintain this information is to create a file folder at the beginning of each year for each rental property you own. After you enter the information into your spreadsheet, put the physical documentation into the folder.
If you have a mix of physical papers and electronic documents, you may choose to print out the e-docs and put them in the folder. Or you may decide to scan the physical documents so you can place them in your digital file.
Do whichever works best for you, but put them all in the same place so you don’t miss anything come tax time. And if you have everything in digital form, make sure you have back-ups in place. You don’t want to lose everything in a computer glitch.
If you don’t maintain a file and the IRS comes around asking questions, you may have to spend a lot of time searching through credit card and bank statements and other sources of information trying to find documentation.
How to Use the Rental Income and Expenses Spreadsheet
This spreadsheet organizes your expenses and income on a monthly basis. The first tab on this Excel spreadsheet contains the annual summary of all your rental income and expenses listed by month. This is the report you’ll print out at the end of the year and provide to your tax preparer.
However, to enter monthly information, you simply locate the tab at the bottom of the page labeled with the month you want to work with. When you click on it, a spreadsheet will pop up and you can begin entering information for that month.
To make tracking mileage easier, we have provided a mileage calculator to the right of the expense columns. Be sure to enter the IRS-approved mileage rate at the top of the table. Then whenever you enter miles driven into the mileage calculator, the dollar amount for mileage allowance will come up. Add that amount to the expense column.
Give this template a try and you’ll soon learn how easy it is to track your rental property expenses. Below are sample images of both the summary page and the monthly detail page. Click on the Excel link above to download this template.
- Create a Copy. To get started, first create a copy of the spreadsheet. You’ll need one for each year, and for each property.
- Zero Out. Go through the spreadsheet and delete any values in the monthly tabs. Make sure you delete information in all the cells, so you don’t throw off your data for the new year.
- Start with January. Click on the tab to go to the January sheet. (If you’re starting mid-year, click on the tab for whatever month you are beginning with.)
- Enter Income & Expenses. For monthly data entry, enter the rental income and expenses whenever they occur. Entering this in real time ensures you don’t forget to enter an expense.
- Save Receipts. When you enter an expense, put the receipt into a file folder labeled for that property and year.
- Repeat. For each subsequent month, click on the appropriate tab, enter the income and expenses.
- End of Year. Click on the Summary tab, review to ensure all income and expenses are accounted for, print this page, and give to your tax preparer.
Worth the Effort
Whether you are new to managing rental properties or simply someone who hasn’t found a good way to keep track of your properties, we think you will find this rental property expense template invaluable.
Everything you need to track is accounted for in the template, all you have to do is fill in the blanks. And if you take a few minutes to do that each time you have an expense or receive payment, it will reward you at the end of the year. What a relief to simply print the summary page and let your tax professional take it from there.