Step 1: separate the money
Use a bank account and card just for the rental, so rental income and expenses are not mixed with personal activity. This makes reconciliation much easier.
Step 2: set up three records
- A rent roll for units, tenants, lease dates, rent, and deposits held.
- A rent ledger for charges, payments, and balances. Add a running balance if you like.
- An expense log with a receipt reference on every line.
Not sure how they differ? See rent ledger vs rent roll vs expense log.
Step 3: build the monthly habit
Follow the monthly rent collection checklist: enter charges, log payments as they arrive, reconcile to the bank, and back up the file. For cash, see documenting cash rent payments.
Step 4: keep supporting documents
Use the records checklist and the move-in and move-out checklist to decide what to save for each rental.
Step 5: prepare for tax time
The Schedule E guide and the year-end checklist show how the records feed into a return. For the IRS's own description of rental records, see the IRS rental recordkeeping guide. Ask a tax professional about your specific situation.