Rental Property Accounting for Small Landlords

How we picked these tools

We looked for rental property bookkeeping tools a landlord with 1 to 20 units can run alone: bank feeds so transactions arrive on their own, tracking by property, a report that maps to Schedule E, receipt storage, and a price near $0. Each is scored on the same scorecard we use for all software, with cost weighted heaviest.

Scores are provisional, built from vendor pricing and documentation checked October 18, 2026, and recurring themes in public reviews. Live account tests are under way and will replace them. Commission never sets the order.

The two tools, ranked

1. Stessa: best free bookkeeping for landlords

Stessa is accounting-first landlord software. The free Essentials plan covers unlimited properties, bank feeds, basic reports, online rent collection, screening and maintenance tracking, with one portfolio and five receipt scans a month. Manage costs $12 a month billed annually ($15 monthly) and adds the Schedule E report, 60+ legal forms, faster rent payouts and unlimited state leases. Pro costs $28 a month billed annually ($35 monthly) and adds unlimited portfolios, budgeting and pro-forma tools, advanced reports and phone support.

Cost: $0 at 1, 5 or 20 units on Essentials, or a flat $12 a month on Manage.

Watch for: bank feeds that drop transactions or need frequent reconnecting, slow support even on Pro, no subscription refunds, and single-entry style books. If your CPA wants a full balance sheet, ask what they need before you commit.

2. Baselane: best for a bank account per property

Baselane is a bank and a bookkeeping tool in one. The free Core plan gives you unlimited checking and savings accounts through Thread Bank (FDIC insured), debit cards, property-level tracking, a Schedule E report, automated rent collection with reminders and late fees, and a mobile app. The Smart plan, $20 a month billed annually, adds 2-day rent deposits, auto-tagging, receipt matching, a balance sheet and cost segregation tools.

Cost: $0 on Core and $20 a month on Smart, at any size.

Watch for: some landlords describe it as buggy, support leans on AI, and there are reported limits on how accounts and debit cards are structured.

Open a separate bank account for your rentals

Mixing rental money with your personal account is a bookkeeping mistake that costs nothing to avoid. A separate account means every deposit is rent or a refund and every withdrawal is a rental expense, so your bank statement is most of your bookkeeping.

A simple setup for one to five units:

• One operating account for rent in and expenses out.
• One reserve account for repairs, vacancies and capital items like a roof or water heater.
• A security deposit account if your state requires one or you want deposits kept apart. Massachusetts, for example, requires deposits in a separate interest-bearing account in a Massachusetts bank, and New Jersey requires an interest-bearing account in a New Jersey bank with the bank’s name given to the tenant.

Baselane makes it easy to open one account per property. With Stessa, you connect the accounts you already have.

A chart of accounts that maps to Schedule E

Rental income and expenses go on Schedule E (Form 1040). If your categories match its lines, tax time is a matter of printing a report.

Schedule E line	Category	Examples
3	Rents received	Monthly rent, late fees, pet rent, kept deposits
5	Advertising	Listing fees, signs
6	Auto and travel	Mileage to the property, trips to the hardware store
7	Cleaning and maintenance	Turnover cleaning, lawn care, pest control
8	Commissions	Leasing or tenant placement fees
9	Insurance	Landlord policy, umbrella share
10	Legal and other professional fees	CPA, attorney, eviction filing
11	Management fees	Property manager
12	Mortgage interest paid to banks	Interest from Form 1098
13	Other interest	Private loans, credit card interest on rental purchases
14	Repairs	Fixing a leak, patching drywall
15	Supplies	Light bulbs, filters, small tools
16	Taxes	Property tax
17	Utilities	Water, trash, owner-paid electric
18	Depreciation expense or depletion	Building and improvements (from Form 4562)
19	Other	Software, HOA dues, bank fees

A few things don’t belong on Schedule E at all. Mortgage principal isn’t deductible. A security deposit you’re holding is a liability, not income, until you keep part of it. Improvements like a new roof are capitalized and depreciated, not expensed in the year you pay.

Receipts and records

Save a photo of every receipt the day you get it and attach it to the matching transaction. Stessa’s free plan allows five receipt scans a month, which is enough for one or two quiet units; Baselane’s Smart plan matches receipts to transactions automatically.

Keep a mileage log if you drive to the property: date, purpose and miles. Keep the closing statement from your purchase and every improvement invoice in a folder you’ll never delete, because those records set your depreciation and your gain when you sell.

Depreciation basics

You can’t deduct the price of a rental building in the year you buy it. Instead you depreciate it over 27.5 years, straight line, for residential rental property. Land isn’t depreciable, so only the building counts.

A worked example: you buy a rental for $280,000 and the county assessment puts 20% of the value in the land. The building’s basis is $224,000, and $224,000 divided by 27.5 is about $8,145 a year of depreciation. The first year is smaller because depreciation is counted from the middle of the month the property is placed in service (the mid-month convention).

Improvements get their own schedule. A new roof is depreciated over 27.5 years from the date it goes in, while appliances, carpet and furniture used in a rental are generally 5-year property. Small purchases may qualify to be expensed right away under the IRS de minimis safe harbor, up to $2,500 per item or invoice if you elect it.

When you sell, the depreciation you took (or could have taken) is taxed as recapture, at a rate of up to 25%. Skipping depreciation doesn’t avoid that tax, so claim it every year.

A monthly bookkeeping routine

Bookkeeping for a few rentals takes about as long as you let it pile up. A short routine each month keeps it to minutes:

1. Check that every rent payment arrived and matches the ledger. Note any late fees charged.
2. Categorize new transactions from the bank feed into your Schedule E categories, and split any that cover two properties.
3. Attach receipts to every expense over a few dollars.
4. Move money to reserves. A fixed amount each month for repairs and capital items, so a water heater doesn’t come out of rent.
5. Glance at the property-level report. If one unit’s expenses are rising, you’ll see it long before tax time.

Once a year, before you file, run the Schedule E report, add depreciation, and send your CPA the report, the Form 1098 for each mortgage, your property tax bills and a list of improvements. If you paid independent contractors, ask your CPA whether you need to file Form 1099-NEC for any of them.

When to hire a CPA

Plenty of landlords with one or two long-term rentals file their own Schedule E. Bring in a CPA or enrolled agent when any of these apply:

• The year you buy. Allocating land and building, and handling closing costs correctly, sets your numbers for decades.
• The year you sell, or if you’re considering a 1031 exchange.
• An LLC or partnership files its own return or has more than one owner.
• A loss. Rental losses fall under the passive activity rules. Landlords who actively participate can deduct up to $25,000 against other income, but that allowance phases out between $100,000 and $150,000 of modified adjusted gross income.
• Short-term rentals, which can follow different rules.
• Properties in more than one state, each with its own return.
• A cost segregation study, which needs professional judgment.

What to look for in rental accounting software

• Bank feeds that pull transactions in automatically.
• Tracking by property and by unit.
• Categories that map to Schedule E, and a report that prints them.
• Receipt capture attached to each transaction.
• Export to CSV or your CPA’s software.
• The price at your unit count, including any limit on portfolios or receipt scans.