Rental property income and expenses
What counts as rental income, which expenses landlords usually record, and how to keep them straight all year.
Updated October 30, 2026
See the Rental Property Spreadsheet
What counts as rental income and expenses
Rental income is money, or something worth money, you receive because someone uses your property. Rental expenses are what you pay to own, rent out and look after it. Net income is the difference, and it is the number that tells you whether a property pays for itself.
The idea is simple. The details are where landlords lose track, so this guide goes through both sides.
Why tracking both sides matters
Rent is easy to remember because it arrives every month. Expenses arrive in odd amounts at odd times: an insurance bill in February, a tax bill twice a year, a plumber in June. If you only look at rent, every property looks good. Tracking both is how you find the one that is quietly costing you money, and it is what you need at tax time.
Income to record
- Rent, on the date you receive it.
- Advance rent. In the US, rent paid ahead counts in the year you receive it, even if it covers next year.
- Fees: late fees, pet fees, a fee to end a lease early.
- Security deposits you keep. In the US, a deposit you plan to return is not income. The part you keep is income in the year you keep it.
- Expenses the tenant pays for you. If the tenant pays a $200 repair and takes it off the rent, record the full rent as income and $200 as a repair.
- Other income, such as coin laundry or parking.
Expenses to record
These groups cover most of what small landlords pay:
| Category | Examples |
|---|---|
| Mortgage interest | Interest only, from the lender's statement |
| Property taxes | Local property or council tax on the rental |
| Insurance | Landlord policy, liability cover |
| Repairs | Fixing a leak, a broken window, an appliance |
| Cleaning and maintenance | Yard work, gutters, cleaning between tenants |
| Management fees | A property manager's percentage |
| Utilities | Water, power or gas you pay for the tenant |
| HOA fees | Condo or homeowners association dues |
| Advertising | Listing fees, signs |
| Legal and professional fees | Accountant, lawyer, eviction costs |
| Supplies | Smoke alarm batteries, light bulbs, locks |
| Travel | Trips to the property for repairs or showings |
| Commissions, other interest, depreciation, other | Anything that does not fit above |
Not everything you pay is an expense in the year you pay it. In the US, the loan principal is never an expense, and improvements such as a new roof are depreciated over several years. Other countries draw these lines in their own places.
See the Rental Property Spreadsheet
How to keep track during the year
Keep one table with one row per payment: date, property, category, description, amount. Enter amounts as positive numbers and let the category say which side they are on. Add rows once a week or once a month from your bank statement; it takes minutes when you do it often and hours when you do it in April.
Keep a separate bank account for your rentals if you can. Then the statement is the list of rows, and nothing personal gets mixed in.
Several units or shared costs
With more than one property, every row needs a property name. When one bill covers two properties, such as a single insurance policy, split it into two rows using a fair basis like the share of rent or floor area. If you live in one unit of a duplex and rent the other, expenses for the whole building usually need splitting between the two, and the rules for that are worth checking with a tax professional.
Worked example
One year for a condo, 40 Oak Ave, Unit 3, rented for $1,100 a month with a property manager taking 8%. These are sample numbers from the Reamwise template.
| 40 Oak Ave, Unit 3, 2025 | Amount |
|---|---|
| Rent (12 × 1,100) | 13,200.00 |
| Total income | 13,200.00 |
| Property taxes | 1,980.00 |
| HOA fees (4 × 285) | 1,140.00 |
| Management fees (8% of rent) | 1,056.00 |
| Insurance | 540.00 |
| Utilities (water and sewer) | 410.00 |
| Repairs (dishwasher pump) | 220.00 |
| Supplies | 37.50 |
| Total expenses | 5,383.50 |
| Net income | 7,816.50 |
Expenses take about 41 cents of every rent dollar here, with no mortgage. Add a mortgage and the picture changes fast, which is why the net line is worth more than the rent line.
Common mistakes
- Only counting rent as income. Fees, kept deposits and tenant-paid repairs count too.
- Recording the full mortgage payment as an expense. Only the interest is.
- Mixing personal and rental spending, especially on shared cards and accounts.
- Vague descriptions. A row should still make sense to you, or an auditor, a year later.
- Waiting until tax season. Receipts go missing. A few minutes a month is enough.
Questions
Is a security deposit rental income?
In the US, not while you plan to return it. The part you keep is income in the year you keep it. Other countries have their own rules.
Can I count my own time as an expense?
Generally no. Your own work on the property is not a cost you paid. Money you pay someone else to do the work is.
What is the difference between a repair and an improvement?
A repair keeps the property in working order, like fixing a leak. An improvement makes it better, longer-lasting or adapts it to a new use, like a new roof. Many tax systems treat the two differently.
Should I record expenses before the first tenant moves in?
Yes, record them with their real dates. Whether they count in that year depends on your tax rules, but you will want the records either way.
How long should I keep receipts?
Your tax authority sets the minimum. Keeping a scan of every receipt, named by date and property, makes it easy to keep them as long as you need.
Do I need accounting software?
Not for a handful of properties. A spreadsheet with one row per payment and formula totals does the job.
Summary
Record every kind of rental income, not only rent, and every expense with a date, property and category. Keep the principal of the loan and big improvements out of everyday expenses. Look at net income per property, because that is where the surprises are. The Rental Property Spreadsheet comes with these categories set up and a year of sample numbers to check against.
Disclaimer. For general information only. Not tax, legal or financial advice. Check the rules for your country or ask a qualified adviser. Read the full disclaimer.