Summer Tax Prep: Why Now Is the Time to Get Ahead

Most landlords think about taxes in February. By then, the year is already over — and so are most of the opportunities to do anything about it.

In this Shorty episode, we break down why summer is actually the smartest time to get your rental finances in order. You still have months left in the tax year, which means if you find a problem now, you still have time to fix it.

We cover three things every self-managing landlord should be doing right now: getting your expense tracking current, understanding where you actually stand financially at the midpoint of the year, and building clean records before your end-of-year CPA conversation. We also share a personal story about missing a significant deduction — and why that mistake was too costly to fix after the fact.

Plus, a quick look at how the right accounting system (QuickBooks, or a property management platform with built-in accounting) can make all of this happen in the background automatically — and why your choice of tool matters more than most landlords realize.

Episodes & Resources Mentioned

Episode 12: Our Experience With a 1031 Exchange, Would We Do It Again?

Episode 18: 7 Ways to Increase Profit for Your Rental Property 

Episode 28: The Cash Reserves Blueprint: Protecting & Expanding Your Portfolio

Episode 45: Basic Tax Strategies For Real Estate Investors

Episode 46: Advanced Tax Strategies for Your Real Estate Portfolio

Episode 55: Preventative Maintenance That Brings Peace of Mind

Episode 79: Accounting Software Options for Real Estate Investors

Episode 99: 5 Oversights That Drain Your Income

Episode 111: Stop Guessing, Start Budgeting

Good Read: Basic Tax Strategies 

Good Read: Advanced Tax Strategies Book   

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Transcript

Introduction & Why Summer Matters for Your Rental Finances

Stacie 0:00

Most landlords think about taxes in February, but by then, the working year is already over. So whatever you didn't track, whatever deductions you missed, that ship has sailed. We know how this feels firsthand because a few years back, we missed out on expensing a couple thousand dollars on one of our properties and by the time we caught it, it was not worth asking our CPA to go back and fix it. That money was gone. So today, we're talking about what to actually do right now, this summer, while you still have time to act before the year closes out.

Speaker 0:44

Welcome to Your Landlord Resource Podcast. Many moons ago, when I started as a landlord, I was as green as it gets. I may have had my real estate license, but I lacked confidence and the hands-on experience needed when it came to dealing with tenants, leases, maintenance, and bookkeeping. After many failed attempts, fast-forward to today, Kevin and I have doubled our doors and created an organized, professionally operated rental property business. Want to go from overwhelmed to confident? If you're an ambitious landlord or maybe one in the making, join us as we provide strategies and teach actionable steps to help you reach your goals and the lifestyle you desire, all while building a streamlined and profitable rental property business. This is Your Landlord Resource Podcast.

Stacie 1:33

Hey landlords. Welcome back to the Your Landlord Resource Podcast. For anyone new here, well, first, thanks for giving us a listen. I'm Your host, Stacie, and I'm here with my husband and my business partner, Kevin.

Kevin 1:49

Hi, everyone, and thanks for taking the time to listen to us today. To jump on what Stacie was saying-

Stacie 1:57

No jumping on me, Kev. That's not allowed in the workplace, married or not.

Kevin 2:02

Oh my God, are we gonna be the next Coldplay meme now? Okay, let me rephrase that. To add to what Stacie was saying.

Stacie 2:12

Thank you. Much, much better.

Kevin 2:14

Okay. To add to what Stacie was saying, for those of you who are new here, Stacie and I own and self-manage a couple of multifamily rental properties in California and Idaho. We're also Realtors and specialize in property management, so we know a thing or two about how to manage your own rental properties. Which is what we talk about on this podcast. All right, so here's a quick general question for all of you to start us off. When was the last time you actually looked at your rental numbers? Not at tax time, but right now in the middle of the year. Yeah, if you're drawing a blank, this episode is for you.

Stacie 3:00

M- exactly. Y- you know, most landlords think about taxes in February, but by next February, the tax year is already over. You know, so think about it. Whatever you didn't track, whatever deductions you missed, whatever decisions that you wish you'd made differently, that ship has sailed.

What "Getting Ahead" Actually Looks Like

Stacie 3:21

You know, there's a mindset shift here that we wanna talk about today. Because summer feels like the season to slow down, but for your rental finances, it's actually the season to potentially speed up. You still have months left in your tax year, and that means if you find a problem right now, you still have time to fix it. So now is the time to sit down and evaluate all the things that you have wanted to do to your rental property. So think about this. Do you have deferred maintenance? What can you do with the units now or before the year ends as preventative maintenance? Can you do these tasks yourself or do you have to hire it out? Have you researched what each projects is gonna cost you? And that's obviously cost as in money, but also as your time, you guys. Again, you don't have to complete everything in the summer, but before the year ends. So this episode is a reminder for all of you to think about if those projects, whether big or small, can be researched, evaluated, and completed so you can expense them off in this current tax year.

Kevin 4:32

So today's shorty episode is all about what to actually do this summer to get ahead of taxes and why the timing matters as much as the task itself.

Stacie 4:44

All right. So

Tracking Expenses While They're Still Fresh

Stacie 4:45

let's start with the most basic piece, and it's the one that people put off the longest, and that's getting your expense tracking current. And I know not everyone, but for many of you, summer is when most of your maintenance and repair expenses are happening anyway. So like we just did this, you have HVAC servicing, maybe you have painting, or finally you're fixing that fence that's been needing some work. If you're not logging those receipts as they happen, by January, you're staring at six or maybe even 12 months of receipts trying to remember what half of them were even for, and that's not only annoying, it's also expensive. Legitimate rental expenses are generally deductible in the year you pay for them. If you're not tracking them in real time, you could be sitting on deductions you don't even know you have, like us.

Our Personal Story: The Deduction We Lost

Stacie 5:42

Several years ago, there was a significant charge, like a couple thousand dollars, and I think it was a set of appliances for a unit or maybe it was the fee for an appraisal, and we put it on our personal airline credit card so we could get the points. And then when the bill came, we just paid it off with our personal funds, and we never looked back. And I forget how it was that it came about, but we found that well after the fact, and we had failed to include it in the expenses for that property in the working tax year. By the time we found it, it was not worth paying our CPA to amend our taxes, and so we lost out on being able to deduct that expense. And here's the thing, this occurred when we were doing a ton of renovations to a couple different properties, so there likely were many items that were overlooked and not expensed properly. And we do realize that most of you are not handling 10 or more rental doors, so your level of control is probably much more manageable. But, you know, life gets busy, and if you're trying to work full-time and handle a household and manage rentals all at the same time, you're not gonna be as organized as if this was your full-time job and highest priority. So our advice is go get that box or your file folder where you're shoving all your receipts for the year and organize them. And in a minute, Kevin's gonna go over different software that is available to help you track your expenses more professionally. But if you're not ready for that, at minimum, you need to at least have a spreadsheet or a ledger book where you're logging all the money that's coming in and going out every single month. Make sure that you're looking over your rental property bank accounts as well as your personal credit cards, 'cause we all do it. We run to Home Depot or the local hardware store to pick something up for your personal home and end up remembering that you needed window screen tape or an air filter or something for your rental, and you lump it all into one transaction on your Visa and you go about your day. So pull out those statements and go over the last six months and see what your expenses are.

Kevin 7:59

And it's not all about remembering to post or account for expenses that you incur.

Mid-Year Financial Check: Questions to Ask Right Now

Kevin 8:05

The second piece is understanding where you actually stand financially right now, midyear. Not, "I think we're doing fine," but you want an actual number. Money in, money out, by property. That's the only way you know whether this is a year where you should be pulling some planned expenses forward or a year where you need to have a different conversation with your accountant

Stacie 8:32

Which is what we just did the other day for the Idaho property. We sat down and we evaluated the rents coming in and the expenses going out.

Kevin 8:40

Right. And we have talked more than once about whether we should keep this fourplex or move on to something else. A lot of our conversation has to do with the fact that we bought this property as a 1031 exchange and how it would look to sell it and 1031 exchange into something else. Now, we know that 1031 exchanges can be stressful, so we keep tabling that for another time. And if you wanna hear more about the 1031 exchange that we did for that property in Idaho, you can check out episode 12 at yourlandlordresource.com/ episode12. Boy, that was a long time ago.

Stacie 9:22

Yeah, I know. It was back when we first started the podcast. But that's not what we wanna talk about right now, so let's move on. Let's discuss how understanding where your rental stands financially mid-year really makes a difference. So let's say you have all of your financials in order. All of your income and your expenses are logged, and you have a really solid idea of how your rental property is performing financially. So some questions to ask yourself are this: Are you holding back enough reserves? If your rents have increased, so are your expenses, and the basic rule of thumb for reserves is to hold back a minimum of 10 to 15%. Now, we did an episode on reserves. We'll link it in the show notes in case you wanna learn more about how much to hold back each month. The next question is, are all of your security deposits properly held in a separate account and for the correct amounts of each lease held? This is especially important if you have multiple properties. When is your insurance policy renewing, and have you looked it over to see if there are any items to add or change to be protected better or even save some money? If you have a broker, meet with them to find out if your coverage is enough or if they can recommend ways to lower the cost. One way is to have a higher deductible. All right, another question is, are your property taxes being assessed for the correct amount? If property values have fallen at all, you might have some room to have them reassessed and save some money there. Who pays for the utilities at the rental properties or the landscaping? And is there any room to add fees to increase your income or reduce your expenses? We just added a utility fee to our Sacramento units, and it's added several hundred dollars more in expense recapture, which is a fancy way of saying it's not income. It's a reimbursement of an expense that we cover on behalf of tenants. You should be asking yourself, what are all the ways that you can increase your income? That can actually be earning more by the way of rent increases, adding fees, adding amenities, or doing updates that make your property more valuable. You know, we've done several episodes on ways to increase your income. We've even done an episode on evaluating your expenses. And interestingly enough, our most listened to episode is called Five Oversights That Drain Your Income. That's episode 99, and it can be found at yourlandlordresource.com/episode99. We'll link that with all the other episodes that we're talking about in the show notes for you. So once you get a really solid financial picture for each property, you can start to make decisions on whether you should do any improvements or perform preventative maintenance or just do general maintenance based on how much money that you have to play with. You can also consider how making some small changes in your income and expenses affects your bottom line.

Kevin 12:35

And hey, you guys, we get it. You maybe only have a few expenses a month, so there's not much to manage. But you still need to sit down now, not after the year ends, and do a full evaluation. See where each property you own sits financially so you can make informed decisions on what's next, and not just hope for the best.

Clean Records = A Better CPA Conversation

Kevin 12:59

Okay, now the third piece, which most people underestimate, is just having clean records by the time you actually sit down with your CPA. If you walk into a fall planning conversation with messy books, your accountant spends their time and your money doing data entry instead of strategy. If you walk in with clean numbers or financials, that conversation can actually be about decisions. So

Why the Right Accounting System Changes Everything

Kevin 13:28

there's three things to focus on. Track expenses as they happen, know your numbers at the midpoint of the year, and keep your records clean enough that a planning conversation with or without your CPA is even possible. I know this is all simple to say, but it's genuinely hard to do without the right system behind you.

Stacie 13:51

Yeah, and that's really the heart of it. None of this happens by accident. It happens with intention and because you've got some kind of system tracking it for you automatically in the background. Okay, you guys,

QuickBooks: What Works (and the Honest Learning Curve)

Stacie 14:05

so this is where we're gonna get personal for one second. Kevin and I use QuickBooks for our properties. We invoice our tenants directly through it for rent and for fees. And when they pay, not only does it go directly into our bank account, but that income is automatically coded to the correct income or expense account and lands in the right place in our financials. No manual entry, no reconciling everything by hand at the end of the month. And that's exactly the kind of tracking it as it happens that we just talked about. It all works in the background without us even thinking about it.

Kevin 14:44

Now, I'll be honest about something here because it matters. Stacie has a background in accounting and finance, so setting QuickBooks up wasn't intimidating for her. She knew how to build it correctly the first time. For someone without that background, QuickBooks can have a real learning curve, because it wasn't built specifically for rental property accounting. You have to set up that structure yourself.

Stacie 15:12

Right, and usually your CPA can help you with that.

Property Management Platforms with Built-In Accounting

Stacie 15:15

And it's a really useful thing to know before you pick any tool because QuickBooks isn't the only way to get this done. You know, there's a bunch of property management platforms. Think about, um, TurboTenant or DoorLoop, Rent Redi, Innago, and, and there's so many others that build accounting features directly into the product. And they're specifically designed around rental properties. Some of them map your numbers straight into Schedule E categories automatically. And essentially what that means is that they categorize your numbers the way you're gonna need to enter them on your Schedule E tax form. Some software have receipt scanning built into their mobile app, so you just snap a photo, and it's logged to the correct expense account automatically right from that photo. Some even sync directly with QuickBooks, you know, if you wanna do, like a hybrid setup, which means your property management software, like DoorLoop and Rent Redi, have ways that can link your income received and expenses tracked through their app to QuickBooks. And here's why that's important. When you sign up for the QuickBooks online version, which I believe is the most common one now, it lets you invite your CPA directly as an accountant user with a full view and edit access to your books. And I will say that many, if not most, CPAs use QuickBooks for accounting in their business. Remember, many CPA firms have bookkeeping services, and from our experience, most of those are using QuickBooks for that. When they, your CPA, has access to your financial information, they can do evaluations before you even meet. They can pull what they need to know to do your taxes without you having to upload a bunch of financials for them to manually input into their system They can also do the year-end closing accounting entries for things like depreciation, capital contributions and draws after your taxes are finalized to close out your year. This then provides you with complete financials that you will need should you want to, say, apply for a loan or for any situation where you have to provide proof of income. Maybe you have a child going off to college and you have to co-sign and you're gonna have to prove your income with that. This is all part of owning any business, you guys. You have to track and evaluate your financial position at least twice a year. What software you use can really help you in the process.

Kevin 17:56

Yeah, and the point isn't which software is best. The point is that tool you use should make tracking easier, not harder. If your current system feels like a fight every time you sit down with it, summer is the time to evaluate whether a different setup might actually save you time before the year is out.

Stacie 18:18

Yeah. We'll drop links to the property management software that we partner with in the show notes, and that includes QuickBooks, in, in case you wanna look at what might fit your setup better. The bigger takeaway is this, whatever you're using, the goal is the same. Make it easy enough that you'll actually keep up with it.

Kevin 18:38

So

Three Actions Steps to Take This Week

Kevin 18:39

here's what we'd actually suggest doing this week, not someday, but this week. First, go log into whatever you're using right now and see how currently it actually is. If it's behind, spend, you know, 30 minutes or so catching up while the receipts are still fresh in your mind. Second, pull a profit and loss report for the year so far, even if it's just a rough one on an Excel spreadsheet. See where you stand, because those numbers will tell you a lot about conversations you need to have before December rolls around. And third, if that process feels like pulling teeth, that's useful information too. It might mean it's time to look at whether your current system is actually working for you, or whether something built more specifically for landlords would save you all those headaches.

Stacie 19:32

Yeah. Uh, none of this is about overhauling your whole life in July. It's about a few small actions now that give you real options later, instead of finding out in February that the options you had are already gone. And one more thing, anything you discover which involves your actual tax strategy, please talk to your CPA or your real estate attorney. Remember, we're sharing what works for us and what we found out there that could work for you. We're not giving personalized tax advice.

Kevin 20:08

All right, so

Wrap-Up & Related Episodes

Kevin 20:09

that's it for this shorty episode. Oh, and one more thing. We have linked several of our related podcast episodes in the show notes today to go deeper on a lot of what we touched on. Everything from tax strategies to budgeting to accounting software options. If any of that sparks something for you, check the show notes and keep the momentum going. So go check your numbers, see where you stand, and give yourself the rest of the summer to get ahead of it.

Stacie 20:40

And hey, you guys, I want to thank everyone for being here. We love when you engage with us, and it seems like everyone is really enjoying the content that we're putting out. So if you like what we are talking about here and you know another landlord who might also enjoy the podcast, would you please share it with them? And if you have it in you, please leave us a kind review so that we can continue to move up those charts. And as always, subscribe on your favorite podcast platform so that every week our episodes are automatically there and ready for you to listen to. And I know none of these things really seem like a big deal, but ultimately it's a big deal to us because it lets us know that you want us to keep making more episodes to share our knowledge and our experiences with you. So hit like, hit subscribe, and tune in every week. Also, check out the show notes for links to any products or episodes that we mentioned today. Thanks again for listening. Until next time, you've got this landlords.