How should a landlord track mileage, property management fees and mortgage interest?
Every expense needs to be assigned to a specific property. When you own multiple rentals, mixing expenses together makes tax reporting harder and hides which properties are actually profitable. Set up your accounting software with a separate class or project for each property so every transaction gets coded to the right place.
Mileage requires contemporaneous logs. The IRS wants you to record trips as they happen, not reconstruct them at year end. Use a mileage tracking app like MileIQ or keep a written log in your vehicle. Record the date, destination, purpose, and miles driven. Deductible trips include driving to show a property, meet contractors, collect rent, handle maintenance issues, or pick up supplies. Commuting from your home to a rental property generally counts as business mileage since the property is a work location.
Property management fees are straightforward if you use a manager. The monthly statement shows their fee, and you assign it to that property. Review those statements carefully because they often include pass-through expenses like repair costs, advertising fees, or leasing commissions that need to be categorized separately.
Mortgage interest shows up on Form 1098 from your lender at year end. If you have one loan per property, the tracking is simple. If one loan covers multiple properties, you need to allocate the interest based on property value or loan balance. Track the monthly payment breakdown between principal and interest so you know the deductible portion throughout the year instead of waiting for the 1098.
Escrow accounts require extra attention. Your monthly mortgage payment might include property taxes and insurance, but those are separate deductions. Track what actually gets paid out of escrow, not what you deposit into it. Your lender’s annual escrow statement shows the actual tax and insurance payments made on your behalf. Those are the amounts you deduct on Schedule E.
Owner contributions need their own category. When you put personal money into a property for a major repair or to cover a cash shortfall, that’s not rental income and shouldn’t run through operating accounts the same way. Track these contributions separately because they affect your basis in the property and shouldn’t inflate your expense numbers.
Keep digital copies of all supporting documents. Lender statements, property management reports, contractor invoices, and mileage logs should all be organized by property and by year. If you get audited, you need to produce documentation that matches what you claimed on your return.
Landlords who stay on top of this throughout the year have a much easier time at tax season. Those who dump everything in a folder and figure it out later often miss deductions or make errors that trigger IRS questions. If your records are behind or disorganized, bookkeeping cleanup and catch-up services can get everything sorted and set up systems that make ongoing tracking manageable.
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