Your CPA files Schedule E for rental properties, which means they need income and expenses broken down by property and categorized correctly. If you own multiple rentals, each property needs its own set of numbers. Lumping everything together creates extra work for your CPA and increases the chance of errors.

Start by separating your records by property address. Each rental should have its own income total and expense breakdown. If you’re using QuickBooks or similar software, set up each property as a class or location so transactions automatically sort themselves. If you’re using spreadsheets, create separate tabs for each property.

Track rental income by source. Most of it is rent payments, but you might also have late fees, pet deposits, or cleaning fee forfeitures. Security deposits you return aren’t income, but deposits you keep become taxable. Your CPA needs to know what came in and why.

Categorize expenses the way Schedule E wants them. The main categories are advertising, auto and travel, cleaning and maintenance, commissions, insurance, legal and professional fees, management fees, mortgage interest, repairs, supplies, taxes, and utilities. Don’t create custom categories your CPA has to decode. Match the IRS categories and their job gets easier.

The repairs versus improvements distinction matters more than most landlords realize. A repair maintains the property in its current condition. Fixing a leaky faucet or patching drywall is a repair and fully deductible in the current year. An improvement adds value or extends the property’s life. A new roof or kitchen renovation is an improvement that gets depreciated over time. Your CPA needs to know which is which because the tax treatment is completely different.

Gather your mortgage interest statements. Your lender sends a Form 1098 showing interest paid for the year. Property tax statements from the county show what you paid in taxes. These are straightforward deductions but your CPA needs the actual documents.

Keep receipts organized and accessible. Real estate investors often lose track of smaller expenses because they paid cash or threw away the receipt. Digital photos stored by property work well. Your CPA might not need every receipt, but if you’re ever audited, you need proof for every deduction claimed.

Track mileage if you drive to properties for maintenance, inspections, or tenant meetings. The IRS allows a standard mileage deduction, but you need a log showing the date, destination, purpose, and miles driven. Recreating this from memory at year end doesn’t work and won’t survive an audit.

Provide a summary document with your records. A one-page sheet per property showing total income, expenses by category, and net income or loss gives your CPA a quick reference. They’ll verify against your detailed records, but the summary helps them see the full picture immediately.

The best time to prepare is throughout the year, not the week before your tax appointment. Monthly reconciliation means your books are already clean when December ends. If you’re behind or your records are a mess, working with small business bookkeepers in Santa Fe to get caught up before tax season will save you money on CPA fees and reduce stress on everyone involved.