If you’re in real estate—whether you’re an agent, flipper, or rental property investor—bookkeeping isn’t just about compliance. It’s how you track profitability, avoid tax headaches, and make smart decisions. Real estate bookkeeping involves large transactions, fluctuating income, and many property-specific expenses. And without a solid system, you can quickly lose control.
This article outlines the most important bookkeeping tips tailored specifically for real estate professionals. One tip, in particular—class tracking—is a game-changer for managing multiple properties. Let’s dive in.
1. Separate Your Real Estate Finances
Open a dedicated business bank account for each entity or portfolio. This is the first step to getting your books clean and audit-ready. It also protects your legal liability and ensures your records are easier to manage and reconcile.
If you manage several rental properties or flip projects, using separate sub-accounts can make tracking even more accurate.
2. Use Class Tracking to Organize by Property
Class tracking is arguably the most essential feature in real estate bookkeeping. It allows you to group income and expenses by property, unit, client, or even project.
In software like QuickBooks, a “class” can represent:
- A specific property (e.g., 123 Oak Street)
- A type of income stream (e.g., Rental vs. Commissions)
- A business segment (e.g., Flips vs. Long-Term Rentals)
Why it matters:
- Lets you generate property-level profit and loss reports
- Makes it easier to identify which units are performing well
- Keeps shared expenses from being lumped together
- Simplifies investor reporting and tax prep
✅ If you’re using QuickBooks Online, make sure Class Tracking is enabled in your settings. For a full walkthrough, visit the QuickBooks Help Guide.
Pro Tip: Use consistent class names (like the address or unit number) so that reports stay organized and readable.
3. Choose the Right Bookkeeping Software
Not all accounting software is built for real estate. Choose one that lets you track income and expenses by class and provides property-specific insights.
Top picks include:
- QuickBooks Online – Excellent for class tracking, bank integrations, and reporting
- Stessa – Designed for landlords and free to use
- AppFolio or Buildium – Ideal for larger portfolios with tenant management needs
Want to understand why so many real estate pros rely on QuickBooks? Check out our article on What is QuickBooks to explore its features, benefits, and how it can simplify your real estate bookkeeping.
4. Categorize Real Estate Income and Expenses Properly
To stay tax-ready and financially clear, use real estate-specific chart of accounts, such as:
- Rental income
- Mortgage interest
- Repairs and maintenance
- Insurance
- Property taxes
- Utilities
- Management fees
- Capital improvements (tracked separately for depreciation)
Using detailed and consistent categories ensures accurate reports and reduces stress at tax time.
5. Track Mileage for Property Visits and Client Meetings
If you’re driving to open houses, rental units, inspections, or client appointments—you’re likely eligible for a mileage deduction.
Use tools like:
- MileIQ
- QuickBooks mileage tracker
- Everlance
Be sure to log:
- Date of the trip
- Purpose (e.g., showing, inspection)
- Miles driven
- Associated property or class
6. Reconcile Your Bank Accounts Monthly
Always reconcile your bank and credit card accounts with your bookkeeping records. This ensures:
- No missing or duplicate transactions
- Errors are spotted early
- You have an accurate picture of available funds
For busy real estate businesses, monthly reconciliation should be a non-negotiable habit.
7. Keep Detailed Records for Every Transaction
Real estate is document-heavy. Save:
- Receipts
- Lease agreements
- Vendor invoices
- Tax forms
- Closing documents
- Insurance policies
Use Google Drive or Dropbox folders named by property or class for easy access.
8. Don’t Overlook Owner Contributions and Draws
If you’ve invested personal money into the business or taken profits out, these must be logged as:
- Owner contributions (capital in)
- Owner draws (capital out)
They don’t affect profit and loss but are important for equity tracking and clean books.
9. Understand Depreciation and Capital Expenses
Your bookkeeper or CPA will handle depreciation schedules, but your books should still show capital expenses clearly. These include:
- Roof replacements
- HVAC systems
- Major renovations
Label these as “Capital Improvements” and track per property/class to make tax prep easier.
10. Hire a Real Estate-Savvy Bookkeeper When Needed
As you scale, DIY bookkeeping gets harder. When that happens, hire a bookkeeper who:
- Understands class tracking
- Can work with multiple entities or portfolios
- Knows how to prepare real estate-specific reports
- Understands IRS rules for property deductions
This investment pays for itself in accuracy, tax savings, and peace of mind.
Frequently Asked Questions (FAQs)
Can I use class tracking in QuickBooks Self-Employed?
No. Class tracking is only available in QuickBooks Online (Plus and Advanced plans). Consider upgrading if you’re managing multiple properties.
Should I create a separate chart of accounts for each property?
Not necessarily. It’s more efficient to use class tracking within a shared chart of accounts, especially when using software that supports it.
How do I handle shared expenses between properties?
Allocate shared expenses proportionally using classes. For example, divide property management fees based on rent collected per unit.
Final Thoughts
If you’re in real estate, your books are as important as your properties. From separating finances and tracking mileage to mastering class tracking and reconciling monthly, good bookkeeping is how you build long-term wealth—not just survive tax season.
By taking control of your financial systems now, you’ll position yourself to scale, impress lenders or partners, and confidently grow your portfolio.
Start with class tracking. It’s the smartest step you can take today to gain clarity, control, and confidence in your real estate finances.
