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Individual & Business Tax Services

Accounting & Bookkeeping

Rental Property Tax Preparation

Rental properties can be great investments and a good way to increase your net worth. However, there are several tax related issues during the purchase, management and sale of your rental property. The proper handling, coordination and reporting of taxable events can improve your tax consequences, while incorrect tax reporting can create numerous future problems.


Dave’s clients include landlords, property managers, residential, commercial, vacation, and time-share property owners who depend on him to get their professional filings done right the first time. An expert in rental property accounting and tax services, Dave has proven experience in preparing all of the required forms for your property rental activity

Keeping accurate records is crucial to helping you monitor the progress of your rental property, prepare your financial statements, identify the sources of receipts, keep track of deductible expenses, prepare your tax returns, and support items reported on tax returns. The following are some basic recommendations for record keeping to support documentation of your rental property expenses:  


What Records Should I Keep?

Good records will help you monitor the progress of your rental property, prepare your financial statements, identify the source of receipts, keep track of deductible expenses, prepare your tax returns and support items reported on tax returns.

Maintain good records relating to your rental activities, including the rent and the rental repairs. You must be able to document this information if your return is selected for audit.

Keep track of any travel expenses you incur for rental property repairs. Separate receipts for minor repairs like plumbing, fixing a broken door or minor repainting from receipts for capital improvements like adding a new roof, remodeling a kitchen or installing insulation.

You must be able to substantiate certain elements of expenses to deduct them. You generally must have documentary evidence, such as receipts, canceled checks or bills, to support your expenses.

If you are audited and cannot provide evidence to support items reported on your tax returns, you may be subject to additional taxes and penalties. For example, if you cannot substantiate the rental real estate expenses of replacing the door locks, with appropriate records, the IRS may disallow that expense which may mean that you incur additional taxes and penalties.

You need good records to prepare your tax returns. These records must support the income and expenses you report. Generally, these are the same records you use to monitor your real estate activity and prepare your financial statements.


Rental Property Tax Preparation Forms

  • Schedule E – Supplemental Income and Loss
  • Form 4562 – Depreciation and Amortization (includes depreciation classification depreciation schedules, and interpretation of depreciation special allowances as it applies to your individual tax return)
  • Form 8582 – Passive Activity Loss Limitations
  • Form 4797 – Sales of Business Property (also Involuntary Conversions and Recapture Amounts Under Sections 17l9 and 280F(b)(2))
  • Form 1099 – MISC Income


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