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A chart of accounts for rental property is a bookkeeping tool that organizes all your financial transactions and brings clarity to your portfolio’s reports. Without a well-organized chart of accounts, keeping accurate books and running reports will be difficult. Plus, you won’t have the tools to make informed decisions for your rental property business.
In this article, we’ll define what the chart of accounts (COA) is, review its major sections, and cover common mistakes with COAs. We’ll also provide a sample chart of accounts for rental property, answer FAQs, and share a tool to simplify the COA and bookkeeping for landlords.
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Key Takeaways
- A chart of accounts organizes transactions and supports clear financial reporting.
- Every COA should include five account types: assets, liabilities, equity, income, and expenses.
- Real estate–specific accounting software provides a preconfigured COA tailored for landlords.
What is a chart of accounts?
The chart of accounts (COA) is a list of all financial accounts in a business’s general ledger, the record-keeping system for its financial information. Think of the COA as an organizational tool that groups your rental’s transactions by category. Because it groups similar transactions, you gain a clearer view of your company’s financial health.
When set up correctly, COAs help landlords and investors quickly find and review data.
What are the five sections in charts of accounts?
No matter the size of your portfolio, you’ll always have five main sections in your COA:
- Assets: This section lists the major items you own, like bank accounts, land, buildings, autos, fixtures, furnishings, or capital improvements.
- Liabilities: These accounts represent debts, such as mortgages, credit cards, lines of credit, and loans.
- Equity: This section shows the money that you’ve invested in the business and the earnings that you’ve reinvested or distributed to partners.
- Income: Revenue accounts are for the money that your business earns, like rent or late fees.
- Expenses: These accounts reflect how the business spends money on operations, including maintenance costs, property management fees, and advertising expenses.
Each account will be assigned to one of these five types, and accounts typically follow the same order as the main financial reports. That means balance sheet accounts come first, then the income statement accounts. Keeping these five types of transactions separated helps ensure that your financial statements comply with financial reporting standards.
It’s important to understand that these accounts aren’t static. A rental property or property management chart of accounts can change over time, so you can add or archive accounts as your rental business grows. Subaccounts help you further organize your transactions and gain deeper insight into your finances by providing more detailed information. For example, in the expense section of your COA, you could have accounts for each of these types of outlays:
- Airbnb fees
- Cleaning costs
- HOA fees
- Interest
- Office supplies
- Software subscriptions
- Utilities
How to Set Up a Chart of Accounts for Rental Property
Most accounting software for landlords comes with a chart of accounts. When you use bookkeeping software that’s specific to rental property, like TurboTenant Accounting, the chart of accounts is preconfigured for real estate. Additionally, you can customize the COA to add or remove accounts based on your specific situation.
However, if you use generic bookkeeping software, you’ll need to make significant modifications to the built-in COA before it applies to rental property.
Pro tip: Make tax time easier for you and your CPA by setting up your chart of accounts in accordance with the Schedule E categories.
Follow the five steps below to set up and review the chart of accounts for rental property businesses:
Step 1: Confirm Your Assets
Start by adding one account for each fixed asset associated with the entity. Use this list as a starting point, then add or remove accounts to fit your business.
- Autos
- Accumulated depreciation
- Buildings
- Checking accounts
- Down payments
- Ernest money deposits
- Fixtures
- Furnishings
- Land
- Property improvements
- Savings accounts
Step 2: Review Your Liabilities
Next, list your debts. Each loan should have its own account in your COA.
- Auto loan
- Credit cards (one account per card)
- Equipment loan
- Line of credit
- Mortgage
- Occupancy taxes payable
- Refundable security deposits
Step 3: Set Up Equity Accounts
For this section, you’ll need two essential accounts:
- Owner funds (or owner investments)
- Retained earnings
Step 4: Add Income Lines
Now it’s time to create accounts for each type of income you expect to earn from the rental.
- Application fees
- Cancellation fees
- Cleaning fees
- Interest revenue
- Late fees
- Laundry fees
- Parking fees
- Pass-through utility income
- Pet rents
- Rents
- Security deposits retained
- Storage fees
Step 5: Group Expense Accounts
For the final section, use the 15 Schedule E expense accounts as your base, then add subaccounts if you need more detail within those accounts.
- Advertising
- Auto and travel
- Cleaning and maintenance
- Commissions
- Insurance
- Legal and other professional fees
- Management fees
- Mortgage interest
- Other interest
- Repairs
- Supplies
- Taxes
- Utilities
- Depreciation expenses
- Other
The Other category is a great candidate for subaccounts, so you can track items like bank fees, education costs, HOA fees, or tenant gifts.
Common Mistakes for Rental Property Chart of Accounts
1. Making the COA Too Detailed
When a chart of accounts has too many accounts, it’s more difficult to manage, and misclassifying transactions is easier. In some situations, you always need to add a new account, like when you open a new bank account or get a loan. Sometimes, adding a subaccount can improve your reporting by providing more detail. What you want to avoid is having a separate account in the COA for each vendor. That level of detail doesn’t help; it just adds clutter.
2. Using a COA That’s Too Simple
If your rental property or property management chart of accounts is too simple, your reports won’t be helpful because they can’t answer your questions. For example, if the revenue section of your COA is just one line — Rental Income — then you can’t tell how much of that income is from rents vs. late fees or pet fees. Missing accounts can increase the risk of transaction misclassification when categories are too broad.
3. Being Inconsistent with the Coding
Using a numbering system is common with COAs, but it’s not required. Larger companies are more likely to use a coding system that includes division, department, and account codes. Small-scale rental property owners don’t need a numbering system, but if you start using codes, stick with it. Consistency will help keep your COA organized.
4. Not Reviewing or Updating the COA Regularly
Your chart of accounts should evolve as your business changes. Review your COA at least once per year — or when you make significant changes to your portfolio. Updating the COA helps it remain clear and relevant.
Sample Chart of Accounts for Rental Property
Need a chart of accounts template for a rental property business? Use this sample COA to get started.
| Account name | Account type |
|---|---|
| Checking account | Asset |
| Savings account | Asset |
| Emergency fund | Asset |
| Accumulated depreciation | Asset |
| 123 Main St. (Your property address here) | Asset |
| Capitalized closing cost | Asset |
| Capital improvements | Asset |
| Furniture and fixtures | Asset |
| Land | Asset |
| Auto | Asset |
| Mortgage | Liability |
| Auto loan | Liability |
| Line of credit | Liability |
| American Express | Liability |
| Visa | Liability |
| Security deposits held | Liability |
| Occupancy taxes payable | Liability |
| Owner funds/investment | Equity |
| Retained earnings | Equity |
| Application fees | Revenue |
| Cleaning fee income | Revenue |
| Rent | Revenue |
| Security deposits retained | Revenue |
| Pet fees | Revenue |
| Parking fees | Revenue |
| Late fees | Revenue |
| Pass-through utility income | Revenue |
| Advertising | Expense |
| Mailers | Expense |
| Marketing consultant fees | Expense |
| Online ads | Expense |
| Website | Expense |
| Yard signs | Expense |
| Auto and travel | Expense |
| Car repairs and maint. | Expense |
| Mileage | Expense |
| Cleaning and maintenance | Expense |
| Cleaning fees | Expense |
| Pest control | Expense |
| Snow removal | Expense |
| Yard maint. | Expense |
| Commissions/referral fees | Expense |
| Depreciation | Expense |
| Insurance | Expense |
| Flood insurance | Expense |
| Hazard insurance | Expense |
| Homeowners insurance | Expense |
| Legal and professional fees | Expense |
| Accounting and tax prep | Expense |
| Bookkeeping software | Expense |
| Legal costs | Expense |
| Property management software | Expense |
| Management fees | Expense |
| Airbnb service fees | Expense |
| Property management fees | Expense |
| Vrbo service fees | Expense |
| Mortgage interest | Expense |
| Other | Expense |
| Bank fees | Expense |
| Education costs | Expense |
| HOA fees | Expense |
| Tenant gifts | Expense |
| Other interest (non-mortgage) | Expense |
| Repairs | Expense |
| Electrical repairs | Expense |
| HVAC repairs | Expense |
| Plumbing repairs | Expense |
| Roof repairs | Expense |
| Supplies | Expense |
| Office supplies | Expense |
| Postage | Expense |
| Printing costs | Expense |
| Small tools | Expense |
| Taxes and licenses | Expense |
| Business license | Expense |
| Local licensing fees | Expense |
| Property taxes | Expense |
| Utilities | Expense |
| Electric | Expense |
| Natural gas | Expense |
| Water/sewer | Expense |
Pro tip: Add an additional account called Ask My Accountant, and set it up as an Other Expense. This is a separate account and category that will draw attention and remind you and your accountant to review the transactions included in that account. Whenever you’re not sure how to categorize a transaction, you can move it to Ask My Accountant.
Can a chart of accounts work for multiple rental properties?
As a real estate investor with multiple properties, you need to track your investments’ performance from a single unit to the portfolio as a whole. Plus, the IRS requires investors to report rental property activity on a property-by-property basis on the Schedule E. This means tracking financial transactions for each property separately is crucial.
However, using a single COA and set of books for an entire portfolio is not recommended. You’ll need separate accounting records for each entity, but you can use your original chart of accounts to simplify setting them up. And if your LLC contains multiple properties or units, you can use classes or tags in accounting software to distinguish transactions for properties or units.
Key point: For each entity, you need a separate set of books. However, you can use a copy of your original COA to streamline the setup process.
TurboTenant Accounting: Simplify Your Bookkeeping
The chart of accounts is the backbone of your rental property’s books. You need a COA that’s organized and optimized for real estate — and that’s where TurboTenant Accounting comes in. Our software is designed specifically for rental property owners and comes with a preconfigured chart of accounts for real estate.
No accounting degree? No problem.
TurboTenant Accounting is for landlords, not accountants. That’s why our platform includes tools and templates to help you get your books in order:
- Automate your mortgage accounting and use our template to record loan payments.
- Make tax prep easy and hassle-free with our Schedule E report, tax packet, and accountant access.
- Record transactions with automatic, rule-based matching to save time and improve accuracy.
- Run reports on demand to track your property’s performance at the unit, property, or portfolio level.
- Track fixed assets and calculate depreciation to maximize your deductible expenses.
Say goodbye to templates, spreadsheets, and generic COAs that need extensive, time-consuming modifications, and get started with TurboTenant Accounting. Sign up for a free TurboTenant account today!
The Essential Chart of Accounts for Rental Property FAQs
What type of account is rental income?
Rental income goes in the income section of your chart of accounts. You can add subcategories to track your rental property’s income sources, such as rent, late fees, pet rent, storage fees, etc. Each of these will be an income account.
Why is the chart of accounts important?
The chart of accounts is important because it organizes your financial transactions in an easily accessible format, enabling you to find and review line items quickly.
Are all charts of accounts the same?
No, there’s no one format for a chart of accounts. Although they usually follow the same structure, you can modify your COA to reflect your industry and specific business.
Do all charts of accounts use a numbering system?
A numbering system is a standard accounting practice for a chart of accounts, but it isn’t required. Using a numbering system can help with data entry, reporting, and consistency. The larger the business, the more likely the chart of accounts will use a numbering system.
