The rental property vacancy rate in Florida was around 6.5% in 2021. This rate is relatively low. As a result, you should have no trouble keeping your rental units occupied.
Of course, keeping units occupied is a vital part of managing rental properties. But another essential responsibility is managing property accounting.
Many property owners struggle with this responsibility. Yet, it's crucial for your business.
So here is a guide with some property accounting tips. Keep reading to learn more.
Calculate Total Property Costs
Owning rental properties is a business. You can set it up as a sole proprietorship, LLC, or another business structure. But you will pay taxes on your income.
So the first thing you'll learn in an accounting guide is to calculate your total property costs. When you buy rental property, you must know your cost basis. This basis is essential for your accounting records and includes:
- Cost of the property
- Legal fees
- Closing costs
- Bank fees
- Design plan fees
Adding up these costs gives you the correct cost basis for your accounting records.
Take Advantage of Depreciation
Depreciation is one of the top reasons you need your property cost basis. Depreciation is an expense you can use on your taxes. So writing off depreciation lowers your taxes even though it doesn't cost money.
Depreciation is an expense you write off over a period of years. An accounting firm or property manager can help you determine the length of time.
Thus, the purpose is to write off the property costs over the course of many years.
Track All Income and Expenses
The primary source of income for rental property businesses is rent. Your tenants pay rent to live in their apartments.
Of course, running tenant screenings is essential for a rental property business. These screenings ensure you find the right tenants. Your tenant quality affects your income.
As a landlord, you must record all the rent money you receive. This money is your income.
But rental property accounting also includes writing off expenses. Depreciation is an expense, but rental property owners also have many others:
- Utilities
- Repair costs
- Maintenance costs
- Tenant screening fees
- Property management fees
Tracking your income and expenses is essential for every landlord.
Use Software
Real estate investors can track their income and expenses in several ways. The best way is through accounting software.
Accounting software lets you input these numbers. Then, the software records it.
Accounting software lets you print reports to see your expenses and income. You can also use it to pay your bills.
Many landlords hire property managers to handle their duties. If you hire a property manager, they'll use accounting software to record your accounting transactions.
Hire Someone to Help With Your Property Accounting
Keeping accurate records is the number one objective for property accounting. You can follow these tips to manage your bookkeeping tasks. But you can also hire a company to do it.
Contact us at HomeRiver Group if you need help in the Ocala area. We offer property management services. In addition, we can assist with your property accounting and other duties.
