Most investors start thinking about taxes in December, right when the window to fix anything is closing. By then, missing receipts, misclassified expenses, and messy ledgers turn into rushed decisions and higher prep costs. The better time to get ahead of it is now.
We asked Dan Weimer, Accounting Co-Manager at Marketplace Homes, what investors should be doing this fall. His answer wasn’t a new deduction or a clever strategy.
“Aside from the obvious things like speaking with your CPA to maximize deductions, Section 179 deductions, accelerated depreciation, etc., one of the best year-end tax moves an investor can make doesn’t involve taxes; it involves making sure their books are right.”
Clean books give you and your CPA an accurate picture of the year, which is the foundation for every other tax decision. Here are four behind-the-scenes moves Dan recommends making before December arrives.
1. Clean up your property ledgers before December
Small loose ends add up over twelve months. Old credits, outstanding vendor bills, security deposit activity, and unapplied payments can all make it harder to see what actually happened at a property.
“This makes it easier for the accounting team or CPA reviewing the financials to track down missing information and could save time during tax preparation, which can save extra money.”
The less time your CPA spends chasing down details, the lower your bill is likely to be.
2. Catch owner-paid expenses that never made it into the books
When you pay a property bill directly, it’s easy for that payment to never show up in your financial reporting. Property taxes, utilities, and HOA dues are common examples.
“Items like property taxes, utility payments, HOA payments, and other property expenses are often left out of financial reporting because the owner pays them on their own and forgets to record the payment on their end, which can understate expenses for the year.”
Dan’s fix is simple: compare your bank activity against your property ledgers. Any property expense that appears in one but not the other is worth recording before year-end.
3. Make sure expenses aren’t lumped together incorrectly
How an expense is classified affects when you get the tax benefit. A capitalized cost is depreciated over several years, while a current-year expense is deducted now.
Dan points out that reviewing your capitalized ledgers can surface items that should have been expensed this year instead. Catching those before your return is filed can make a real difference in this year’s numbers. Your CPA can confirm the right treatment for anything you flag.
4. Run a year-end variance review
Unusually high or low expenses are often a sign that something was missed, duplicated, or miscategorized.
“A simple year-end variance review can be an easy tool to catch items that may otherwise go unnoticed. Compare each category against the prior year, and if there isn’t an obvious reason for a large variance, it would be a good item to flag for additional investigation.”
If repairs doubled because you replaced a roof, that’s expected. If utilities dropped by half with no explanation, it’s worth a closer look.
Start now, not in December
None of these steps require new tax knowledge. They just require time, and October gives you more of it than December will. Whether you own one rental or a large portfolio, clean books make every conversation with your CPA faster, cheaper, and more accurate.
Pick one of these four moves and start this week. Your future self, and your CPA, will thank you.
*This article is for general informational purposes only and is not tax advice. Consult your CPA or tax professional about your specific situation.