Resources for rental property owners

Rental Property Expense Categories: 10 to Track for Every Property

By Constance Beebe, former hotel general manager with more than 20 years in hospitality

Tracking rental property expenses in the same categories every month makes it easy to see what each property costs to run, notice when a cost starts creeping up, and hand your tax professional clean records at year-end. These are the ten rental property expense categories to set up for every property you own.

From my experience

My first job in hotels was night auditor. Every night, every charge had to land in the right place and balance by morning. That habit followed me all the way to general manager, and it’s the same habit that keeps a rental property’s records clear: the same categories, every month, with nothing left in a pile for later.

10 rental property expense categories

1. Management fees and commissions. Your property manager’s or rental program’s percentage, plus any separate fees in your agreement.
2. Cleaning and turnover. Cleaning between stays and laundry, especially any cleaning charges that come out of your share.
3. Repairs and maintenance. Fixes and routine upkeep such as plumbing calls, painting touch-ups, and HVAC service.
4. Supplies. Paper goods, toiletries, light bulbs, batteries, and small household items.
5. Utilities and services. Electricity, water, internet, streaming, trash, pest control, and pool or landscape care.
6. Insurance. Property, liability, wind, flood, and any rental-use coverage.
7. Property taxes. Including amounts paid through a mortgage escrow account.
8. HOA, regime, or resort fees. Dues and special assessments.
9. Mortgage interest. Record interest and principal separately, since they are treated differently.
10. Advertising and booking fees. Listing fees, channel fees, and card processing charges.

Repairs or improvements?

Keep a separate list for major improvements, such as a new roof, HVAC system, or kitchen remodel. A repair keeps the property in working order. An improvement adds value or extends its life, and is generally depreciated over time rather than deducted all at once. Your tax professional can help you sort the borderline cases.

Other expenses you may have

Depending on your situation, you may also track legal and professional fees, such as accounting, travel to the property for rental business, and furnishings and replacements. In the U.S., rental income and expenses are commonly reported on Schedule E, and keeping categories like these from the start makes that much easier.

How to keep rental expense records organized

• Keep separate records for each property.
• Use the same categories every month, every year.
• Record gross rent before fees, then each fee in its own category.
• Save receipts, invoices, and owner statements in a folder for each year.
• Enter each month’s numbers once a month, even in quiet months.

For the full list of paperwork to keep, see our rental property records checklist.

Questions owners ask

Why track rental expenses by category?

Categories show where your money goes, make it easy to compare one month or year with another, and give your tax professional organized records.

Should I record my net payout or each fee separately?

Each fee separately. Recording only the payout hides what your management, cleaning, and repair costs really are.

Is depreciation a rental expense?

Depreciation is a deduction for the cost of the building and improvements spread over time. It is not a cash expense, so it does not change your monthly cash flow. Ask your tax professional how it applies to you.

Keep reading

• Rental Property Records to Keep All Year
• How to Read Your Property Manager’s Owner Statement

About the author

Constance Beebe spent more than 20 years in hotel operations. She started as a night auditor and worked her way up to executive housekeeper, front office manager, assistant general manager, and general manager, later managing 4- and 5-star hotels. She was Front Office Manager at the Best Western King Charles in Charleston during Hurricane Hugo, and a London newspaper wrote about her team. She never asked her staff to do anything she wasn’t willing to do herself, from cooking when cooks didn’t show up to cleaning rooms when housekeeping was short.

This article is general information, not tax, legal, or financial advice. Rules vary by location and situation, so confirm your own treatment with a qualified tax professional.