Why You Need an Accountant to Manage Your Rental Property Bookkeeping

When you own rental property, you may try to manage much of the work yourself in order to save money on the cost of maintenance, renovations, landscaping, rent collections and the like. While you may be legally allowed to manage many aspects of this ownership yourself, you want to seriously think about always using an accountant for the bookkeeping, tax preparation and other financial aspects of ownership. Note how their services can protect you financially.

What you cannot claim

It's a mistake to think that you can claim everything about owning a rental property as a deduction on your taxes. For example, if you use the rental property for personal reasons, such as for storing personal items or if you live in one of the rental units, you typically cannot claim your own personal expenses as a tax deduction against the rental property. This might include your personal utility costs or updates to your own unit. If you work out of your unit, you may be able to claim certain deductions for your utilities and the like, but it can be difficult to know which of those deductions are allowed for business and which are your own personal expenses.

Additionally, you typically cannot claim utilities that are paid for by tenants; if it's written into their lease that a certain portion of what you charge them is for water, cable, and the like, you may not able to then deduct the costs of those utilities you pay. Because these issues are often complex, an accountant can go through all those items and give you the best advice on which are deductions you can take and which are not.

Depreciation

Depreciating property can be difficult as you need to follow a depreciation schedule, meaning that you're allowed to claim only so much depreciation on a property and only for so long. While depreciating a property can be complicated, it can also save you quite a bit of money on your property tax bill, which is usually calculated according to the value of the property. That value declines over time, based on depreciation, unless you update and add features to the property that also add to its value. As this too is very complicated to figure, but can mean saving quite a bit on your taxes if done right, it's good to have an accountant who specializes in rental property manage your depreciation and taxes for you.