Are Accounting Fees Tax Deductible for Landlords? A Simple Guide

Every real estate investor wants to maximize their deductible expenses. But if you’re new to rental property bookkeeping, you may wonder, “Are accountant fees tax-deductible for landlords?” In this article, we’ll discuss which accounting fees you can deduct and how to account for CPA fees when you own multiple properties.

To tie it all together, we’ll cover where accounting costs go on the Schedule E, plus share tips on how to lower your tax preparation fees and potential tax liability.

Key Insights

• Accounting and bookkeeping fees are fully deductible operating expenses for rental property owners.
• Organized, accurate books reduce tax preparation fees and help maximize deductions.
• Using rental-specific accounting software streamlines bookkeeping workflows and reduces stress during tax season.

Which bookkeeping costs are deductible for real estate?

Per the IRS, “associated expenses can be deducted from your rental income.” Costs related to bookkeeping, accounting, and tax prep are considered operating expenses, so they’re deductible. But this category includes more than just your CPA’s fee for preparing and filing your annual returns. You can also deduct the following costs:

• Payments for accounting and tax advice
• Fees for preparing and filing your tax return
• Paying a bookkeeping service, contractor, or employee
• Software subscriptions for bookkeeping and tax preparation

How should landlords handle accounting fees on Schedule E?

IRS Schedule E is the form rental property owners use to report supplemental income and losses, like rental income. Schedule E accompanies your 1040 return and lists 15 expense categories. Line 10 is for legal and other professional fees. That’s where you’ll report accounting fees from your CPA.

Do specific tax-prep tools fall into separate deduction categories?

If you handle some or all of the bookkeeping for your properties, you may have additional deductible expenses to report, like these:

• Accounting software: Whether you have a subscription or a perpetual license, the expense goes on Line 10.
• Bookkeeping training: If you pay for a bookkeeping training course, webinar, or manual, it counts as professional development. These costs will go on Line 19, Other.
• Digital storage subscriptions: If you pay for cloud-based storage software, enter those costs on Line 10.
• Mileage logs: The log itself is an office supply. The cost would go on Line 15, Supplies.
• Scanning apps: Apps you pay for count as software subscriptions. Add these fees to Line 10.

Table 1. Are Accounting Fees Tax Deductible?

 

Pro tip: Line 19, Other, is where you list expenses that don’t fit in other categories. This is the line you’ll use to report costs related to the rental property’s ownership or management.

Are accounting costs from prior years deductible?

If you skipped taking a deduction for accounting costs in prior years, you can’t deduct them on the tax return for this year. However, you can file amended tax returns to account for errors and omissions for prior years. We recommend consulting with a CPA about amended tax returns.

Are all bookkeeping and accounting fees fully deductible in the year they are paid?

Most rental property owners use cash-basis accounting, which records transactions when money is exchanged. So, if you pay $500 for accounting help this year, that amount is fully deductible on the tax return for this year.

How should multi-property landlords handle accounting fees?

Does your portfolio contain multiple properties as part of one business entity? If so, you’ll incur costs that apply across the entire portfolio rather than a single property. The cost of preparing and filing your tax return is a great example of a portfolio-level expense, also known as an overhead cost.

These costs are usually divided among the properties within the entity. Let’s say you have three properties in your LLC, and your CPA bill was $750. You’ll split the cost among the three properties: $250 per property.

If you have more than one entity, ask your CPA what allocation to use for their invoice so you can split the costs appropriately between the entities. A portfolio-level allocation only applies to properties within the same entity.

Did you know? As a TurboTenant Accounting user, you can add portfolio-level expenses, then run reports with the option to prorate those expenses across your properties automatically.

How to Pay Less for Accounting Fees

Keep Up with Your Books All Year

Having complete records is crucial for every aspect of your rental property business. They’ll help you:

• monitor your property’s performance,
• make informed decisions for your properties and business,
• prepare financial reports,
• track income and deductible expenses,
• prepare tax returns, and
• provide support during an audit.

Do you send your accountant disorganized, incomplete books once a year? If so, your CPA has to enter data, reconcile accounts, and look for supporting documentation. That’s basic bookkeeping work that must happen before they can start on your tax return — and that extra time means a higher bill.

By keeping up with your books all year, you’ll have a better understanding of how your properties and business are performing, and you’ll lower your fees for tax preparation. It’s a good way to stay informed and boost your bottom line.

Have Your Supporting Documentation Organized and Ready

Part of bookkeeping is maintaining documentation to support the transactions and data in your account books. If you’re audited, this documentation is crucial for proving the income you earned and the deductions you claimed. Your books should include evidence like this:

• Canceled checks
• Deposit receipts and confirmations
• Invoices
• Loan and credit card statements
• Mileage logs
• Receipts

Keep these supporting documents organized and protected, either in digital or physical files. When your tax preparer receives complete supporting documentation from you at year’s end, they can stay focused on big-picture accounting tasks instead of chasing down missing receipts. That saves them time and you money.

Pro tip: Subscriptions to digital storage options like Dropbox are tax-deductible, but many bookkeeping platforms (including TurboTenant Accounting) include built-in cloud-based document storage.

Use Bookkeeping Software for Rental Property

Using templates or spreadsheets for bookkeeping is a time-consuming manual process that frustrates many small-scale landlords. When a process is difficult or frustrating, procrastinating is easier and more appealing, even when that task is important.

Bookkeeping software reduces manual data entry, saving you time and improving the accuracy of your books. And if you use accounting software for rental property, like TurboTenant Accounting, you’ll save even more time because of the built-in tools and resources designed for real estate investors. The subscription cost is tax deductible, too!

When bookkeeping is less stressful and easier to manage, you’re more likely to keep up with your books and send a complete, more accurate file to your CPA. That gives them a stronger starting point, so it won’t take as long for them to complete your return.

Know When It’s Time to Outsource Bookkeeping

When tax time feels impossible and stressful, that’s a sign that you may benefit from working with a bookkeeper throughout the year. By outsourcing your bookkeeping, your books stay current while you’re free to focus on other parts of your rental business. Plus, you’re less likely to pay late fees or interest unnecessarily.

You’ll see an improvement in your tax return, too. Outdated or inaccurate books lead to problems: You can miss out on deductions or credits, and your CPA has to spend extra time working on the books before preparing your return. With a clean set of books from your bookkeeper, your CPA can work faster, reducing your invoice for tax preparation.

Key point: The cost of the bookkeeping service you use, or the fee for the freelance bookkeeper you hire, is deductible.

Meet with Your Accountant at Least Twice a Year

Don’t wait until tax time to meet with your accountant. Set up a meeting early in the third or fourth quarter. This review session will give you a chance to discuss any adjustments needed to your books and tax strategy. You’ll come away with the opportunity to tweak your spending plans, maximize your deductions, and lower your potential tax liability.

Be prepared when you meet with your CPA. Have a list of your questions ready, along with recent reports or updates that you want to review with your advisor. Doing some prep work before the meetings keeps them efficient — and your billable hours lower.

Reminder: The invoice for your CPA meeting regarding tax advice and planning is a deductible expense. If you meet with a tax specialist to resolve a tax underpayment for your rental property business, the cost is deductible as well.

TurboTenant Accounting: Simplified Bookkeeping for Landlords

TurboTenant Accounting is bookkeeping software built specifically for landlords who want organized, accurate books without spending hours on spreadsheets. When your books are in order and ready for tax time all year, you can focus on what matters — managing your rentals and maximizing your deductions.

By choosing bookkeeping software designed for real estate investors, you’ll streamline your workflow, reduce errors, and make tax prep easier. Powered by REI Hub, TurboTenant Accounting gives you the essential accounting features you need to stay organized and confident about your books:

• A preconfigured, customizable chart of accounts
• Automated mortgage accounting

• Educational resources, including a knowledge base, calculators, and podcasts
• Email and phone support

• Income and expense tracking
• Lease tracking

• Rental-specific templates

• Rule-based transaction matching
• Secure, linked accounts to import transactions automatically

You’ll also get comprehensive reporting at every level: portfolio, property, and individual units. Our double-entry system ensures CPA-approved accuracy, allowing you to generate balance sheets, cash flow statements, and profit and loss reports whenever you need them. Want real estate–specific metrics like cash-on-cash and net operating income? They’re built right in.

But where TurboTenant Accounting truly stands out is tax preparation. Our platform goes beyond generic bookkeeping software to help you capture every deduction you’re entitled to and stay organized all year.

• 1099 vendor tracking
• A Tax Packet export, including a Schedule E report
• A Tax Review tool
• Cloud-based document storage
• End-of-year closeout reviews
• Fixed-asset and depreciation tracking
• Mileage logs
• Tax time double-check tool for easily missed deductions

With TurboTenant Accounting, your books stay clean, accurate, and ready for tax season — no scrambling required.

Take the stress out of tax prep and simplify your books this year. Sign up for TurboTenant Accounting today!

Are Accounting Fees Tax Deductible FAQs