Year-End Tax Prep for Landlords: The Records to Gather Before December 31

|Marchelle Cook
Roof & Ratio Rental Property Profit and Cash Flow Tracker

Most landlords do their tax work in March, when receipts are scattered and memory is fuzzy. The ones who pay less for tax prep, and miss fewer deductions, do the gathering in October through December while the year is still fresh.

This is a records checklist, not tax advice. The goal is to walk into your CPA's office, or open your tax software, with everything already sorted.

1. Reconcile Rent Income Property by Property

Start with what came in. For each property, total the rent you actually received this year and compare it with what the lease says you should have received. Gaps usually come from late payments, partial months at move-in or move-out, and concessions.

Also list any other income tied to the property: late fees, pet fees, application fees and any portion of a security deposit you kept. A refundable deposit you are holding is generally not income while you hold it, but the part you keep for damage or unpaid rent generally is. Note which is which.

2. Sort Every Expense Into a Category

Rental income and expenses are reported on Schedule E for most individual owners. Sorting expenses now into the same buckets saves hours later:

  • Mortgage interest (watch for Form 1098 from your lender in January)
  • Property taxes and insurance
  • Repairs and maintenance
  • Utilities you pay
  • HOA dues
  • Property management fees
  • Legal and professional fees
  • Advertising and tenant screening
  • Travel to the property, with a mileage log
  • Supplies

Keep a receipt or invoice for each line. A bank statement shows that you paid; an invoice shows what you paid for.

3. Separate Repairs From Improvements

This is where landlords most often leave money on the table or get it wrong. A repair keeps the property in working order and is generally deducted in the year you pay it. An improvement makes the property better, restores it or adapts it to a new use, and is generally depreciated over time. Residential rental buildings and their improvements are typically depreciated over 27.5 years.

The IRS tangible property rules include a de minimis safe harbor that lets many landlords deduct items costing $2,500 or less per invoice or per item instead of depreciating them. It requires an election statement attached to a timely filed return, and it has conditions. Flag every purchase near or under that amount, keep the invoices, and ask your CPA whether to make the election.

For larger items, such as a new roof, an HVAC replacement or a kitchen remodel, record the date placed in service and the full cost, including labor. Those become depreciation entries.

4. Get W-9s Now: The 1099 Threshold Changed

If you pay independent contractors such as a handyman, plumber or cleaning crew for work on a rental business, you may need to issue Form 1099-NEC. Under the One Big Beautiful Bill Act, the reporting threshold rose from $600 to $2,000 for payments made in 2026, with inflation adjustments starting in 2027.

That means fewer forms for many small landlords, but you still need to know your totals. Before December 31:

  1. Total what you paid each contractor this year.
  2. Request a W-9 from anyone at or near $2,000. It is far easier to get one before the year ends than in late January.
  3. Note how you paid. Payments made by credit card or through a payment app are generally reported by the payment processor rather than by you.

Forms 1099-NEC for 2026 payments are due to recipients and the IRS by January 31, 2027. Because that date falls on a Sunday, the deadline moves to Monday, February 1, 2027.

5. Collect Your Year-End Documents

  • Closing statements for any property bought, sold or refinanced this year
  • Form 1098 mortgage interest statements
  • Property tax bills and proof of payment
  • Insurance declarations pages
  • Owner statements from your property manager, if you use one
  • Last year's depreciation schedule, so new assets can be added to it

In Texas, property tax bills go out in the fall and are generally due by January 31. When you pay can affect which tax year the deduction lands in, so ask your CPA before deciding whether to pay in December or January.

6. Review Each Property's Real Numbers

Once the records are sorted, the same data tells you how each property actually performed: net operating income, cash flow after debt and what repairs cost you. Year-end is the right time to decide whether a rent increase, a refinance or a sale belongs on next year's plan.

Make Next Year Easier

The Rental Property Profit & Cash Flow Tracker records income and expenses by property and category as the year goes, so year-end becomes a review instead of a scavenger hunt. Owners with several doors can roll everything up in the Rental Portfolio Performance Dashboard. Explore all Landlord & Property Manager Tools.

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Sources

Written by Marchelle Cook, a Realtor for 26 years and a real estate investor and property manager since 2012. This article is for educational purposes only and is not tax or legal advice. Tax rules change and depend on your situation; confirm with a qualified tax professional.

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