8 Actions Rental Landlords Can Take For Better Financial Returns In 2024

If your New Year's Resolution is to get a better tax return or give your rental cash flow boost, you’ve come to the right place. Tax season is right around the corner, so winter is the perfect time to do some warmup activities to be financially fit in the new year. 

Let’s dive into 8 ways to get your rental home finances and books in top shape for 2024. 

How to prepare your rental home finances for 2024

Owning a rental home is a 24/7 job. Whether you manage your own home and finances or get help from professionals, there’s a continuous cash flow of money in and out of your property that needs to be accounted for. 

There’s a lot to get your head around as a landlord when it comes to finances and tax season, but those who are prepared and stay on top of their game will find it a lot easier — and save money in the process.  

1. Get your accounting and documentation in order

Hopefully your shoebox full of receipts disappearing in the last decade or two, but if your rental books still look like a dog’s breakfast, set some time aside to get everything in order to start 2024 on the right foot. 

If you haven't already, it’s also time to finalize your year-end financial statements including income and expenses. Make sure all of your documentation is in order and accurate. This will set you up for success in tax season when spring rolls around. 

Read More: Having These 9 Home-Rental Documents at Hand Will Make You A Much Better Landlord

2. Evaluate rent payments

Are your residents paid up to date? Has everything been properly documented for tax purposes? Many homeowners are nervous about rent collection during the holiday season, but it’s also worth keeping an eye on rental payments to make sure they’re not falling into arrears. If there’s an amount outstanding, let them know so you can arrange a plan to get your residents back on track before too much time passes.  

Pro Tip: If your home is loved by Belong PRO, we’ll guarantee your rent so you can cross this item off your list indefinitely! 

3. Update your home’s depreciation schedule

Depreciation is an essential tax deduction for rental home owners, so make sure yours is up to date to maximize your claim. If you have made any upgrades or modifications to your home over the year (not including essential repairs), this will need to be depreciated rather than claimed as a deduction from your income. 

Pro Tip: Don’t forget to include the total amount that a home improvement costs, including any amount borrowed, labor and material costs, as well as consulting expenses such as architect fees or surveying. 

Read More: Tax Strategies for Rental Investors: 5 Ways To Make A Home Less Taxing

4. Determine your activity level as a landlord

The way you manage your rental home and how many hours you participate in management decisions and activities affects the way you are taxed as a landlord. But you need to prove it. As the year ends, it can be a good time to assess what activities you’ve done and how you qualify. 

For example, if you are self-managing your rental home, you may qualify as having ‘materially participated’ as a real estate professional. Those who qualify can use any losses to offset other types of income, and you won't be subject to the 3.8% tax that applies to net investment income. But you need to show that you have spent 500 hours or more managing your property (or properties) for this to apply. 

If you can’t show this or don’t qualify, owning a rental home is considered a ‘passive activity’ by the IRS. You won’t miss out on tax deductions, but any losses will carry forward until you generate passive income or sell the home.

There is a middle ground known as “active participation” which allows deductions of up to $25,000 of passive losses, even if a company like Belong handles all the heavy lifting day-to-day. The IRS takes into account major decisions about your investment home, such as approving new residents and even appointing a property management company. There are income thresholds and caps on deductions here so you will need to speak to an accountant to determine if you qualify for this. 

Read More: Do You Need a Property Accountant? Here's How to Tell

5. Review your insurance policy

Is your rental home covered by landlords insurance or homeowners insurance? What’s the difference? Well, the difference is that one covers your home for damages and loss and the other doesn’t! While homeowners insurance can be cheaper, it’s only available to owner-occupiers so you could find yourself unable to make a claim if anything happens. Put ‘review rental home insurance’ on your to-do list to make sure you have the right coverage for 2024. 

Pro Tip: Belong PRO offers coverage to our homeowners which can be deducted from your rental income each month, making it one less thing to worry about! This is also a tax-deductible expense so don’t forget to keep records, like the handy ones you can find in the Belong app. 

Read More: What Type of Insurance Should I Get For My Rental Property?

6. Budget for expenses

The cost of living is going up for everyone. In particular, home maintenance costs and materials have surged in recent years, so you may need to revise your budget. Plan for any major expenses or upgrades you hope to do in the year and don’t forget some contingencies for the unexpected. 

Pro Tip: Belong PRO homeowners are covered when unexpected repair costs arise. We let homeowners split the cost of maintenance and repair services over the term of their lease, helping you to spread payments and stay cash-flow positive. Learn more about Belong PRO here. 

7. Book in home maintenance 

On the subject of budgeting for maintenance and repairs — when was the last time your rental home got a tune up? Preventive maintenance is far better than the ‘cure’ of a massive repair bill when something breaks. 

Pro Tip: Belong PRO offers regular service subscriptions, so you can set recurring maintenance needs such as gardening, right within the Belong app. 

8. Set your financial goals or targets for 2024

With your rental home finances in review, early in the year is a great time to evaluate your financial goals and what you hope to achieve with your property. If you’re unsure or need help maximizing the opportunities within your rental property, speak to us at Belong. We know what it takes to maximize your cash flow and have the team to help you do it. 

Read More: How To Do An Accurate Rental Property Cash Flow Analysis

Financial support for a prosperous 2024

Belong is simplifying the rental experience and helping more homeowners reach their financial goals through real estate. Tell us about your rental home now to get started.

You can also visit our homeowner's page to learn more about how our modern, tech-enabled services are helping people to achieve financial freedom and ditch outdated Property Management in San Francisco, San Diego, Los Angeles, Tampa, Jacksonville, Concord, Berkeley, Orlando and more.

Disclaimer: It’s important to consult with a professional and consider your personal circumstances before making any decision on finances or tax. This article should not be considered financial advice.