By Alondra Segoviano
Out of all the responsibilities that come with being a landlord, collecting rent payments is the most important for a few reasons. Not only do these payments help cover operating expenses like your mortgage and maintenance, but the way you handle late payments can also influence the eviction process.
For that reason, you’ll want to have the right reporting in place to help you keep track of all your tenants and their payment history — thus comes in a rent ledger. A rent ledger is a report landlords can use to get an overview of all rent payments they’ve collected with information on the tenant. Keep reading to learn more about rent ledgers and how they can be helpful for you.
Key Takeaways
- A rent ledger shows all the rent payments you’ve collected from your tenants with information on the payer, the unit, when the payment was debited to your account, the payment amount, the status (scheduled or paid), and charge type.
- If you use Avail for rent collection, click on the “Reports” tab to download your “Received Payments” report for free.
- Rent ledgers can be helpful during tax season, in the case of an eviction, or monthly financial review.
What Is a Rent Ledger?
A rent ledger is a spreadsheet or report that includes all the rent payments you’ve collected from your tenants with information on the payer, the unit, when the payment was debited to your account, the payment amount, the status (scheduled or paid), and charge type.
If you use a rent collection platform for your rental property, you can generally download a free rent ledger directly from your dashboard with all payments you’ve collected so far. However, if you use a platform like Zelle or PayPal which are mainly intended for personal use, you will need to create a rent ledger manually.
What Information Is on a Rent Ledger?
As mentioned above, a rent ledger includes the following information:
- Your renter’s name
- The address of the rental property it’s for
- When the amount was debited to your account
- The amount the renter paid
- The status of the payment
- The transaction number
- The charge type
The Benefits of Using Rent Ledgers
There are a handful of benefits of using a rent ledger. For one, periodically reviewing them can help you audit how all of your renters are doing when it comes to meeting their obligation to pay rent on time. There may be times when a late payment goes unnoticed, especially if you don’t have a system in place to automatically spot late payments. In that case, you can review your most recent rent ledger to confirm that all your renters paid rent, on what day, and the amount.
Rent ledgers can also be helpful during tax season, considering rental income is taxed and needs to be reported to the Internal Revenue Service (IRS). You can easily provide your certified public accountant (CPA) or tax professional with a rent ledger so they can see how much you’ve collected in rent and other rental fees per unit.
While this use isn’t as common, rent ledgers can serve as an important piece of evidence in an eviction case caused by failure to pay rent, since they say if a payment is paid or unpaid.
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How To Get a Rent Ledger for Free
The platform you use to collect rent payments usually produces a free report for you to download through your dashboard. If you collect rent with Avail, log in to your account and click the “Reports” tab. Then click on the “Received Payments” report.
Our system will then email a copy of your free report to your email in the form of a spreadsheet to further customize or export as a PDF to share with others.
If you’re a renter looking for proof of payments, you can ask your landlord to provide you with a rent ledger or something similar.
Collect Rent Online With Avail
Having the right tools and resources on hand can be a great way to streamline rent collection and take the stress out of the process. The next time you need an overview of payments you’ve collected, use a rent ledger provided by your current platform or create one manually if that’s your preference.
When you collect rent payments with Avail, you can access helpful reports for free that you can export to customize or share with other people. In addition to that, you can automate late fees, send automated rent reminders, and schedule upcoming payments for all your rentals.
Create an account to get started or log in to your account to download your free report.
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Provided by BiggerPockets
As a landlord, you probably already know that taxes are unavoidable, but that doesn’t mean you can’t minimize them and keep more of your hard-earned cash. The IRS can be your friend who gives you their notes before the test or the bully who takes your lunch money. It’s all about how you utilize the tax code in your favor. Here’s a little guide on how to play the tax game without paying a cent more than necessary.
Tax Advantages Of Rental Properties
First off, depreciation is your best friend. The IRS lets you deduct the wear and tear of your property over 27.5 years. So, while your house may actually be appreciating in value, on paper, it’s “wearing down,” which magically reduces your taxable income. Next, we have deductible operating expenses like insurance, taxes, and more that can significantly lower your tax bill. Finally, there is capital gains tax relief that comes into play when you hold your property longer than one year, which you may qualify for.
Another tip: if you’re planning to sell your rental property, the 1031 exchange is your golden ticket. This lets you reinvest the sale proceeds into another rental property and defer paying capital gains tax. It’s like pressing pause on taxes while you grow your real estate empire.
How is Rental Income Taxed With a Mortgage
Next, if you’ve got a mortgage, you’re in luck. The interest you pay is fully deductible. Think of it like this: every time you make that monthly payment, a chunk of it goes towards lowering your tax bill. And if you use part of your property as your primary residence and rent out the rest, you can even deduct the interest on the rental portion. Sadly, the principal paydown is not tax deductible.
6 Tips To Reduce Your Rental Income Tax
Actively Managing
One of the lesser-known tricks is actively managing your property. According to the IRS, if you spend at least 750 hours a year managing your rentals, they consider it “active” income rather than passive. This classification opens up more deductions, which means more money stays in your pocket. The more involved you are in your property’s upkeep, the bigger the tax benefits. There are several factors to be considered active, so talk with an investor-friendly CPA to learn the ins and outs of qualifying.
Track and Deduct All Expenses
Keep a detailed list of every single expense related to your rental. We’re talking about everything from new appliances to marketing costs and travel expenses. Even the miles you drive to and from the property are deductible. Miss a deduction, and you might as well be tossing money out the window. Even the HOA fees you may pay are deductible. Finally, we can benefit from them telling us our trash cans were out an hour too early.
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Depreciate Capital Investments
If you made any big-ticket upgrades like installing a new HVAC system or putting on a fresh roof, you can depreciate those over time. Depreciation accounts for the natural decline in the value of assets over time. Maintaining your property, and will the IRS reward you for it? That’s a rare win-win for both of us.
Make Borrowing Your Friend
When you take out a loan or line of credit for your rental, the interest is deductible, too. It’s another win-win: you get the cash to improve your property, and you get to reduce your tax bill. Just be careful not to overdo it—too much debt might limit your financing options down the road.
Reduce Capital Gains Tax
Now, if you plan to sell the property, brace yourself for capital gains tax, but don’t worry—there are ways to soften the blow. If the property was your primary residence for at least two of the last five years before selling, you can exclude up to $250,000 ($500,000 for married couples) from capital gains. For those thinking long-term, careful estate planning can help defer and even eliminate capital gains taxes when passing properties on to your heirs. Selling your property or gifting it to a family member will trigger a gain tax. Tax rules swing in our favor, though, when it is an estate gift instead.
Review your property tax assessments regularly
Over-assessed properties mean overpaying taxes. Compare your property’s assessed value to similar ones in your area, and if it looks off, appeal the assessment. You’d be surprised how often tax assessments are higher than they should be. The process to appeal property taxes varies by jurisdiction, so make sure to familiarize yourself with the deadlines and procedures needed. There are even companies that will do all of the work for you in return for a percentage of the money they saved you if you are confused by the process or don’t have time.
Managing rental properties is a juggling act, and taxes are just one of the balls in the air. But with these tips, you can minimize your tax bill and keep your investment profitable. If all these deductions and tax strategies sound overwhelming, don’t sweat it. Software like Baselane can help you stay organized. It simplifies bookkeeping and rent collection and even helps you categorize all those deductible expenses, so you’re not scrambling at tax time. Take it from me, the guy who regularly used to not keep up properly and would turn on panic mode each tax season.
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Source CNN
Renters are gaining the upper hand in the balance of power with landlords. Apartment units are staying on the market for longer. Vacancy rates are rising. And rental growth is slowing. Now, landlords are being forced to offer sweeteners like free parking and free weeks of rent to get tenants to sign on the dotted line.
The share of rental listings on Zillow offering a concession as an incentive to rent climbed to 33.2% in July. That’s flat from June, but up from 25.4% a year earlier and well above the recent low of 19.4% two years ago, according to Zillow.
“Landlords are basically in a race to get tenants, so they’re throwing in a bunch of deals and perks to sweeten the pot,” said Orphe Divounguy, senior economist at Zillow. “Renters have more bargaining power.”
Deals are especially popular in six major metros areas, where more than half of the rental listings on Zillow are offering sweeteners: Raleigh (53.3%), Charlotte (53%), Atlanta (52.2%), Salt Lake City (50.9%), Nashville (50.8%) and Austin (50.5%).
All of those markets have experienced an increase in landlord concessions over the past year, led by Charlotte, where the share of units offering incentives increased by nearly 16 percentage points.
Natalie Garcia, a 23-year-old graduate student in Arizona, had no trouble finding a deal when she was hunting for a place to live with her boyfriend this spring.
“Honestly, all of the apartments I was looking at were running promotions,” Garcia said in a phone interview with CNN.
Garcia and her boyfriend ended up getting half off the first month of rent at a one-bedroom apartment they recently moved into in Scottsdale. “The concession was a bonus,” she said.
Rylee Dunham secured a free month of rent after she and her boyfriend offered to fix a broken fence at a two-bedroom apartment they were looking at in Gilbert, Arizona.
“We totally lucked out,” said Dunham, a 23-year-old school teacher. “I think we would have gotten the free month of rent anyway.”
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High Cost of Living
Despite these concessions, the cost of housing remains a sore spot in the economy.
Shelter accounted for almost 90% of the monthly increase in consumer prices across the economy in July, according to the Bureau of Labor Statistics. Shelter prices jumped 5.1% from last year, although that represents a deceleration from recent trends.
Apartment rents are still getting more expensive, increasing by 5.1% over the past two years, according to Zillow.
However, that’s in-line with historical trends and marks a major improvement from the 22.3% spike during the prior two years.
The shift in the balance of power in favor of renters has been driven in part by a building boom for apartments.
In June, nearly 60,000 multifamily units were completed across the United States, according to government data. That’s the biggest increase in supply since 1973.
The recent building boom has made it harder for landlords to fill some units. The rental vacancy rate remains at 6.6%, the highest since the winter of 2021.
Divounguy, the Zillow economist, said falling mortgage rates could also work to the advantage of tenants by encouraging some would-be renters off the sidelines and into the housing market.
“By being proactive, informed and realizing their leverage, renters can make the most of the perks landlords are offering,” Divounguy said.
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