Phoenix has made an exciting decision: It has approved backyard guest houses. For landlords, this opens the door to new long-term rental opportunities.
But with these new possibilities comes the need to stay on top of Arizona's rental property laws. From tax rules to security deposit requirements, proper accounting is key to avoiding issues.
Accurate accounting is essential, from tracking rental income to complying with tax regulations. Learn about key laws and best practices to help keep your rental property accounting in order.
Learn and Understand the Law
One of the most crucial Phoenix rental property tips is to learn the law. Arizona state law and local regulations govern rental properties. Failing to comply can result in expensive fines, penalties, and lawsuits.
- Transaction Privilege Tax (TPT)
- Security deposit laws
- Income tax reporting
- Expense deductibility
- Arizona Residential Landlord and Tenant Act
- Eviction laws
As you can see, the laws that impact rental property accounting vary greatly. Every aspect needs to be considered. Consulting with a real estate attorney can provide valuable legal insight.
Set Up a Dedicated Accounting System
Ideally, property owners will choose an accounting software and set up separate accounts for their properties before renting to a tenant. However, they should do so as soon as possible if they haven't done so.
Choose software that can automate many processes to streamline management demands and reduce mistakes. It should also have a document management feature. Having accounting records for rentals available will make resolving issues easier.
If you plan to buy more than one property, the software should be able to segment accounting. That way, you can have accurate income, expenses, and profits accounting records. It should also be able to combine all the records to account for the entire portfolio.
Track Income and Expenses
Accurately tracking income and expenses is crucial for the success of your rental property. Create entries for all rental payments, fees, security deposits, and other income. Create records for expenses paid, including:
- Repairs
- Maintenance
- Utilities
- Insurance
- Taxes
- HOA fees
- Property management services
Upload copies of invoices, work orders, and receipts. These are crucial for later reference should you be audited.
Consult a Professional
If you are a first-time landlord or own many properties, consider hiring property management in Phoenix. Another smart option is a local accountant who specializes in rental properties. These individuals have professional experience in providing reliable Arizona rental accounting advice.
A professional can organize rental property accounting and ensure its legal compliance. They can also provide regular reports for property owners to review.
Improve Your Rental Property Accounting
With new rental opportunities in Phoenix, landlords must ensure their accounting practices are accurate and current. Following Arizona's tax rules and security deposit regulations is key to running a successful rental business.
PMI San Tan offers comprehensive property management solutions, including expert rental property accounting. We make it easy to stay organized and compliant while helping you grow your rental portfolio.
Contact us today to learn how our tailored services can help you easily manage your rental properties.
