How To Effectively Manage Your Rental Property Expenses

When first becoming a business owner, real estate investors understand that, like every business, expenses come first. Rental property owners need to keep track of expenses not only to ensure their business stays afloat but also to help preserve their property and tax requirements. Allow one of the best property management services in Montreal to explain why you should track your rental property expenses and which categories you should document.

Why Track Rental Property Expenses?

Rental property investments, like every other business, require care and awareness, especially concerning finances. Good record-keeping can help maintain the business while keeping taxes in order, lowering the risk of audits, and keeping all financially pertinent information handy each new year. There are many reasons to keep track of rental property expenses, including to:

Divide Personal From Professional Income

When tracking income from rental properties, depending on the kind of business you operate, it can be a good idea to separate personal income from professional income. If you operate the business with your personal funds, record keeping can keep an extra watchful eye on your personal funds and professional budget limit so nothing goes awry. 

Track Expectations and Prices

With time, changes in prices are often necessary. Keeping track of your property expenses helps keep your awareness up by comparing past prices to now. With that knowledge, you can track your expectations and raise or lower prices accordingly.

Secure Budget for Repairs

When you need repairs for your property, keeping track of expenses can help you cover them without worry. If you understand all the fees you’ll be experiencing in a month, you can better prepare your budgeting plan for unexpected events, such as property-wide repairs or required upgrades.

Better Manage Taxes

Keeping track of your rental property expenses allows you to better handle your taxes. With proper documentation, you’ll never miss a beat when it comes time to compute your taxable income. Whether you’re doing your taxes yourself or hiring a professional to help you, having more information instead of less is always better.

What Records Should You Keep?

When it comes time to organize your documents, you may wonder which rental property expenses you should keep and how you should organize them.

Keeping track of income and expenses for each property through profit and loss statements is essential. Documentation such as receipts, bank statements, or credit card information are all necessary backups for any business, especially when proving your income. Even for just a small rental business, there are plenty of documents to keep track of, such as:

  • Tenant leases: When you gain a new applicant, keep track of the lease no matter how short their stay is. These should include tenant screening reports so that you have a vivid history of your clientele.
  • Settlement statements: These include statements and escrow reports. When you purchase the property, make sure to keep the inspection documents for your records.
  • Proof of payment: This includes any rent payments, which encompasses the amount received and the date the rent was due.
  • Tenant-adjacent documents: These include commissions paid, late rent notices for the tenant, and maintenance requests.
  • Bank statements: Keeping track of all your bank statements can help provide evidence that you are using your income and business funds appropriately.
  • Proof of payment: Just as you document your income, it’s a good idea to also document all proof of tenant payments for your records.
  • Receipts for management: Any payments you make for the maintenance of the business, including utilities, repairs, and cosmetic fixes, are useful to keep.
  • External expenses: If you have expenses for marketing or advertising your property for rent, document them. These include any online advertising fees, lease preparation costs, and screening reports.
  • Federal tax returns: Any copies of federal, local, or state tax returns are good to have for as long as your business is open.
  • Rental tax records: When you pay tax to the city or state for the property, including your records in a documented file is essential.

Rental Property Expenses: All Categories

When it comes to keeping your records, you can never be too careful. You should keep a record of any expenses you have because of your business, especially when tax season comes around. In the U.S., there are more than a few categories you can sort your transactions into as you get more clients and rent more property. You can document your rental property expenses in some of the following categories:

Travel Expenses

Expenses for your business don’t just mean upkeep, maintenance, and advertising. Costs like travel expenses that are necessary for your business are in this group, too.

When traveling for your business, you should keep track of things like vehicle mileage, airfare, hotel costs, rental cars, and even restaurant receipts. Business trips where you must attend meetings or travel for new property assessments count as part of your travel expenses category.

Operating Expenses

Operating expenses refer to anything you need to keep the doors open. This includes general maintenance, cleaning, and landscaping. Anything you use to keep the building maintained, even between tenancies, are things you can document in this section.

One thing to note about operating expenses is that they differ from repair expenses. Operating expenses can even cover the cost of cleaning supplies if you’re doing the cleaning and maintenance yourself. Regardless of whether you’re hiring a company to help maintain the property for you or doing it yourself, operating expenses are all under the same umbrella — even for pest control. 

Marketing Fees

When you advertise for your business, every statement you make on the internet or to your potential audience costs money. Advertisement or marketing efforts, including radio, online, and paper ads, all fall within the marketing category of expense. Just like with upkeep, any costs you incur by hiring an agency count as well, whether you hire an agency or consultant for your advertising, 


You can classify anything from property to the equipment you use to maintain it to the improvements you add on over time as depreciation. Depreciable assets are useful to document because the IRS classifies them when it comes time for taxes.

Everything from the carpet to the entire residence has a lifespan, each differing according to the IRS. In general, residential properties have an average lifespan of 28 years.

HOA Expenses

If you are using real estate properties that are under the homeowner’s association, you likely have fees to pay. You can categorize these fees separately, whether they are monthly maintenance fees or single expenses. The costs behind HOA help keep the property habitable, which can include services like trash collection, building repair, property management, pool maintenance, and pest control.

Insurance and Interest

Landlord insurance is just another part of being a property owner. If you rent your property out to tenants, you’ll need to record your insurance in this section. If you don’t deduct items such as mileage as a part of your costs, you can also itemize the vehicle costs under this section of rental property expenses. If you secure your mortgage with anything other than a personal loan, mortgage interest also goes in this section.

Management Fees

Unless you’re managing the property yourself, you’ll need to pay for management staff. Having a property manager on your side can be incredibly helpful for your business. Whether you’re simply paying a single manager or allotting pay for an entire management team, keeping tight documentation of pay as it progresses through each month can help keep you accountable when tax time arrives.

Legal Fees

You should document any incurred legal fees. If you get the help of a CPA to manage your rental property accounting, any fees from them are documentable expenses that you should keep a record of for your taxes. These can include legal fees such as coverage for attorney costs.

Keeping track of your costs and fees can help keep risk at a low. If you keep track of your income and fees properly, you’ll have a lower likelihood of running into tax trouble or other legal issues that can stem from your income.

Repairs and Supplies

When you own a property, you’ll no doubt need to repair and supply it throughout its lifetime. This applies to anything that can break on the property, from toilets and appliances to the construction of the property.

One advantage that customers find with renting is the lack of repairs they will need to make on the property. As a landlord, repairs are a big part of property ownership. This also includes supplies for your property. Office supplies that your rental property uses, such as pens, ink, envelopes, and computers, fall under this category.

Utility Fees

You should document all the utility fees you have for each property each month. This includes any service you provide for your tenants, such as internet, water, electricity, gas, and phone lines. Documenting these utilities helps track what you pay for, including if these costs go up or down as the fiscal year progresses.

With a financial management system, keeping track of your utility fees can be easy. Some websites even offer to display these costs in easily digestible formats like charts.


As a landowner, you will be subject to property tax. You should properly document any taxes you pay to your local government for your records. These also include taxes that you pay for payroll or other taxes such as occupancy taxes. 

Turn to Ramfeld for All Your Real Estate Needs

Whether you own just a small rental property for some side income or multiple properties, outsourcing property management services can help boost your earnings. Managing properties alongside a professional company can help boost your reach, making your properties more sought-after and more well-known.

Ramfeld offers property management services that can help make your investment as easy as possible. Our services include:

  • 24/7 communication between you and your tenants
  • Record keeping
  • Rent collection
  • Building repair and maintenance
  • Property inspections
  • Financial reporting
  • Asset optimization
  • Project management
  • Construction consulting
  • Monthly building cleaning

If you want to learn more about our services, we want to hear from you. Managing rental property expenses may sound like a big job, but we can make it easier. Our success comes from providing our clients with the best help, including the tools they need to work well in an ever-changing market. Call Ramfeld at 514-745-6106 to get started with one of our expert team members so you can begin optimizing your finances today.

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