Rental Property Owners: The Records That Save You Money
Repairs versus improvements, mileage, and depreciation basis. Good recordkeeping during the year is usually worth more than any single deduction found at filing.
Rental real estate is one of the most audited areas of an individual return, and also one of the areas where taxpayers most often leave money on the table.
Repairs versus improvements
A repair keeps the property in working condition and is generally deductible in the year paid. An improvement adds value or extends useful life and is capitalized and depreciated. Painting a unit between tenants is usually a repair; a new roof is not.
Keep these all year
- Closing statements from purchase and any refinance — they establish depreciation basis.
- Invoices for every capital improvement, kept separately from routine maintenance.
- A mileage log for property visits, supply runs and management meetings.
- Records of days rented versus days of personal use for any property you also use yourself.
If you own multiple units, a simple monthly bookkeeping routine typically pays for itself the first time you sell a property.
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