--- title: "Bookkeeping for Landlords and Rental Properties | MCC" description: "How to track rent, security deposits, repairs versus improvements, depreciation records and per-property profit for rental owners." url: "https://mcc-solutionsnj.com/bookkeeping/guides/bookkeeping-for-landlords" --- Bookkeeping guide · Updated October 12, 2026 # Bookkeeping for Landlords and Rental Properties Rental income looks simple, but the details trip people up: deposits, repairs that are really improvements, mortgage payments that are partly principal, and several properties sharing one bank account. By [Matthew Coleman](/about), MCC Solutions **Quick answer.** Tag every rental transaction to its property, even with two units, using locations or classes in QuickBooks Online or sub-accounts. The goal is a profit and loss report for each address so you can see which one is losing money and why. Want this handled for you? Monthly bookkeeping, cleanup and year-end close for small businesses. Start with a free health check of your books. [Free health check](/bookkeeping/health-check)[Get a quote](/bookkeeping/#interest) **Related:** [Void vs delete a transaction](/bookkeeping/guides/voiding-vs-deleting-transactions) · [NJ 1099 contractor rule (ABC test)](/bookkeeping/guides/nj-independent-contractor-rule-abc-test-2026) · [Trial balance explained](/bookkeeping/guides/trial-balance-explained) **Free tools:** [What should I charge per hour?](/bookkeeping/freelance-hourly-rate-calculator) · [Depreciation schedule calculator](/bookkeeping/depreciation-calculator) [![Intuit ProAdvisor Gold tier badge](/img/credentials/intuit-proadvisor-gold.png)](https://proadvisor.intuit.com/app/accountant/search?searchId=matthew-coleman77)Gold tier in Intuit's ProAdvisor program. [See my Intuit listing](https://proadvisor.intuit.com/app/accountant/search?searchId=matthew-coleman77) Keeping your own books? Tallyfinch does invoices, bank import and reports on your computer. [See Tallyfinch](/bookkeeping/mcc-books-downloadable-bookkeeping-software) ## Track each property separately Even if you own only two units, tag every transaction to a property. In QuickBooks Online that can be done with locations or classes, or you can use a separate sub-account structure. The goal is a profit and loss report for each address so you can see which one is losing money and why. Rather have it handled? [Landlord-tenant notices and filings in New Jersey](/notary/landlord-tenant-filing), or [process serving with an affidavit of service](/notary/process-serving). ## Rent, late fees and security deposits Record rent as income when received, or when due if you use accrual accounting. Late fees are income as well. Security deposits are different. They belong to the tenant until you apply them to damage or unpaid rent, so they are a liability. Many states require deposits to be held in a particular type of account and returned within a set time, so confirm the rule that applies to your property with the state or a local attorney. ## Mortgage payments need to be split Your lender statement divides each payment into interest, principal, and often escrow for taxes and insurance. Only the interest is an expense. Principal reduces a loan liability. Escrow amounts are paid out to the tax authority and insurer, and are expenses when those bills are paid. Record from the lender's annual statement and monthly statements, not from the bank withdrawal alone. ## Repairs versus improvements A repair keeps the property in its working condition, such as patching a leak or replacing a broken window. An improvement adds value, extends life or adapts the property, such as a new roof or a kitchen remodel. Improvements are typically capitalized and depreciated rather than deducted all at once. The line can be fine, so keep invoices and describe the work, and ask a CPA before you decide on larger projects. Also keep your closing statement from each purchase. Your cost basis and the land and building split matter for depreciation, and you will need it again when you sell. ## Keep it clean for tax time Use a dedicated bank account for each property or at least for the whole portfolio. Pay owner draws to yourself rather than paying personal bills from the rental account. Save receipts for repairs, property management fees, insurance, utilities you cover, and advertising for vacancies. If you hire contractors, collect their W-9 forms. A year-end packet with the profit and loss for each property, the depreciation schedule and the lender interest statements gives your tax preparer what is needed. ## Property managers, vacancies and turnover If you pay a management company, ask for monthly owner statements showing rent collected, fees taken and repairs paid. Record those figures in your books by line, not as one net deposit. The same applies if the manager pays vendors on your behalf. Reconcile their statement to your bank deposits every month. Turnover costs deserve their own tracking. Cleaning, paint, small repairs, listing fees and the lost rent during a vacancy tell you a lot about whether a unit is worth keeping. A unit with constant turnover can look fine on a yearly total yet quietly underperform. ## Common questions **Do I record the full mortgage payment as an expense?** No. Only the interest portion is an expense. Principal reduces the loan balance and escrow is recorded when taxes and insurance are paid. **How do I handle a tenant who pays by app?** Treat it like any rent payment, but match the app's payout to the rent charged, since fees and timing differ. This guide is general information, not tax, legal or accounting advice. Rules, fees and due dates change; check with the IRS, the NJ Division of Taxation or a licensed professional for your situation. Let us handle it [### Monthly bookkeeping Categorizing, reconciling and monthly reports, with cleanup, payroll and NJ filings available. Bookkeeping →](/bookkeeping/) [### QuickBooks Online Monthly bookkeeping, cleanup and reconciliation in QuickBooks Online for New Jersey small businesses. Your account stays in your name. QuickBooks →](/bookkeeping/software/quickbooks-online) More guides - [Bookkeeping for Online Store and Marketplace Sellers](/bookkeeping/guides/bookkeeping-for-ecommerce-sellers) - [Bookkeeping for Consultants and Service Businesses](/bookkeeping/guides/bookkeeping-for-consultants) - [Bookkeeping for Medical Practices and Clinics](/bookkeeping/guides/bookkeeping-for-medical-practices) - [Bookkeeping for Dental Practices](/bookkeeping/guides/bookkeeping-for-dental-practices) Free tool - [Bookkeeping health check](/bookkeeping/health-check) [All guides](/bookkeeping/guides) Reach small landlords and property managers who read this guide: [advertise here](/advertise#landlord). Do it yourself ### Landlord Bundle Run the numbers before you buy, track rent and expenses once you own, and hand your preparer a clean summary at year end. [See what's inside ($69)](/toolkits/landlord-bundle)14-day full refund [![Cover of Paperwork for New Jersey Landlords (ebook) by Matthew Colt](/img/toolkits/nj-landlord-paperwork-ebook/cover.webp)](/toolkits/nj-landlord-paperwork-ebook) From the bookshelf ### Paperwork for New Jersey Landlords The paperwork of owning one to a few rentals in New Jersey. By Matthew Colt, $9.99 as an ebook (EPUB and PDF). [See the book](/toolkits/nj-landlord-paperwork-ebook) [Read the first pages free](/toolkits/nj-landlord-paperwork-ebook#free-starter) Excel workbook ### Landlord Rent Roll and Property Income Workbook See what each unit owes and has paid, which leases end soon and what each property really earns after expenses. [See what is inside ($29)](/toolkits/landlord-rent-roll-workbook) Also in the [Landlord Bundle](/toolkits/landlord-bundle): 3 products for $69 instead of $82 separately. Tallyfinch ### Books you keep on your own computer Tallyfinch does invoices, bills, bank import, reconciliation and the main reports, in a file you own. $99 once, then $5 a month for updates; the app keeps working if you stop the plan. It does not do payroll or sales tax filing. The free download records up to 60 entries. [See Tallyfinch](/bookkeeping/mcc-books-downloadable-bookkeeping-software) [Download it free](/tools/pro/trial/mccBooks) [Compare the three apps](/software) ## Rather have us keep the books? Ask for a quote. [Get a Quote](/bookkeeping/#interest)[Call (908) 444-6373](tel:+19084446373)