Rental Property Supplemental Checklist

Posted Saturday, December 20, 2025

Rental Property Supplemental Checklist

Rental properties have several nuances beyond rental income, mortgage interest, property taxes, HOA dues and depreciation. Sure, some rentals can be straightforward, but when you add in Real Estate Professional Status (REPS), Short-Term Rental Loophole, Material Participation rules, startup expenses versus acquisition costs, repairs versus improvements, cost segregation and accelerated depreciation, and all the other madness in between, we must dig into the details to yield the best tax consequence.

Rental Property Tax Docs and Financial Data

It is not enough to supply a statement from your property manager or online rental management system. These are really good starts, but we need additional information such as historical data, the type of rental (short-term, long-term), your participation in the rental, among other things.

As such, please review the following required information about your rental activities. We also have two templates (see below) that you can use in addition to secure online forms.

Startup and Acquisition

  • Travel, exploratory and related expenses before identifying a property to purchase
  • Travel and related costs once a property has been identified
  • Closing statements (settlement or closing disclosure)
  • Repairs, improvements and furnishings to get the rental property placed in service

Learn more about startup expenses and acquisition costs.

Operating Activities

  • Revenue information including all 1099-MISC and 1099-Ks*
  • Airbnb, Vrbo, and related platform summaries*
  • 1098 mortgage statement including real estate taxes paid
  • Occupancy, lodging and sales taxes paid (aka “innkeeper taxes”)
  • Any business taxes paid (many STRs are considered a business and have extra local tax)
  • Property manager statements showing their fees, repairs and other expenses
  • All other expenses related to the operations of the rental activity

Learn more about rental property tax deductions. including travel expenses and mortgage interest tracing.

* See Vacation Rental Platform section below when using Airbnb, Vrbo and similar platforms.

Other Important Information

  • Detailed list of any major repairs, renovations and improvements (we need details to determine safe harbors, UoP calcs, etc.)
  • Any ancillary purchases such as hot tubs, recreational equipment, furnishings, maintenance gear (e.g., lawnmower), etc.
  • Cost segregation studies
  • Refinancing paperwork such as settlement statements or closing disclosures
  • Are you charging a management fee to the rental activities for self-managing? If so, let’s review together.
  • Attestation of your material participation for REPS or STR loophole

Learn more about material participation including what tasks count and do not count.

Sales Information

  • Closing statements (settlement or closing disclosure)
  • Trip down memory lane of improvements that you might have forgotten about
  • 1031 like kind exchange qualified intermediary information (if applicable)
  • Completed property sale worksheet

New to WCG (yay!)

  • Last year’s 1040 tax return and state tax returns, all pages, don’t hold back (state depreciation is often different than federal)
  • Form 8582 from last year’s tax returns showing any passive activity losses that were suspended (and carried over)
  • Depreciation schedules showing land, buildings, improvements and other assets related to the rental activity

Vacation Rental Platforms

We must be careful with the 1099-K from Airbnb, VRBO and other online vacation rental platforms; it reports “gross” booking amounts which are almost certainly higher than the “net” cash that actually hit your bank account. That missing difference usually represents host fees, platform service fees, and other insidious fees.

OBBBA: Keep in mind that the 1099-K threshold is back to $20,000 in gross receipts and over 200 transactions, and as such you might not receive a 1099-K making the vacation rental platform. This makes the exported data all that more valuable.

To bridge this gap, we need these details from your host dashboard rather than just the simplified PDF summary. This detailed export breaks down every transaction into gross rent, cleaning fees, platform fees, etc., allowing us to accurately report the correct gross rental income to align with the 1099-K but then also report the offsetting expenses. Without this data, you might accidentally pay tax on cash the platform kept for itself!

Finally, if you collect and remit local lodging taxes manually (outside the platform), don’t forget to include that information as well.

Rental Property Activities

Here are two secure online forms and an Excel template for your rental activities. If you have any questions, please let us know and our Rental Expert Pod can assist!

property manager

Rental Setup

Simple online secure form to gather your startup, acquisition and rental launch expenditures.

Rental Operations (Simplified Excel)

Here is our custom operations excel template to help you assemble your rental property financial data.

Rental Operations (robust form)

You might not be into Excel or spreadsheets, so we also have the online secure form version for your submission.

Rental Holding Company Tax Prep

If you own your rental property with another person in an LLC, then you likely must file a partnership tax return on Form 1065 (with rental activities being reported on Form 8825 versus Schedule E). Your spouse counts as another person unless you are in a community property state (WA, IA, CA, NV, AZ, NM, TX, LA and WI). In these states, you can opt to have the LLC be disregarded for tax purposes and report your activities on Schedule E.

Since WCG always prepares a balance sheet with business entity tax returns, here are the additional things we need for the reporting of your rental activities on a partnership tax return-

  • Ending cash balance in the business / rental property checking account on 12/31
  • Ending loan balances on all mortgages (even those that are secured by your primary residence but used to buy a rental)
  • Any personal cash spent on behalf of the LLC (you used your personal credit card on accident or something similar)
  • Any change in ownership structure (for example, you bought out your partner)

It is a common strategy to have a holding company LLC that owns a bunch of other LLCs which in turn own the rental property. Generally, we will report these as separate activities on Form 8825, but will consolidate when reporting on Schedule L (the balance sheet of the partnership tax return).

Rental Property Sale

If you sold a rental property, please review the information below and submit the Property Sale Worksheet to minimize capital gains. If you are performing a 1031 like-kind exchange, let’s chat!

Selling Your Rental Property

Learn about section 1245 and 1250 property depreciation and its impact on your tax obligations.

1031 Exchange

See how 1031 exchanges can maximize purchasing power and minimize taxes on real estate gains.

Property Sale Worksheet

Click here to securely provide your property sale details for accurate capital gains tax calculations.

Rental Expert Pod

We are thrilled to introduce the Rental Expert Pod (REP). Starting with 2025 tax returns, this is WCG’s dedicated team of real estate CPAs and tax specialists designed to handle the unique complexities of your portfolio. Real estate taxation from STR loopholes to cost segregation requires focused expertise, which is why we now have ‘hyper-trained’ specialists prepare the rental portion of your tax returns. The REP works seamlessly with your primary Client Manager’s Pod, ensuring that your real estate reporting is not just compliant, but strategically optimized for long-term wealth.

This collaborative approach turns rental complexity into tax opportunity, allowing our generalists to manage your big picture while the REP digs into the tiny details. We believe your real estate investments are now getting the specific, expert attention they deserve.

Rental Property Tax Preparation

For our real estate investors and rental property owners, our tax return preparation fees for Schedule E on 1040s start at $800. For Forms 8825 on S Corp (1120S) and Partnerships (1065) tax returns, our fees start at $1,000. Please visit our business tax return preparation page for more information on real estate holding companies and partnerships.

There are two considerations- rental property setup, and then rental property tax return preparation.

Rental Property Setup Fees

If you are new to WCG CPAs & Advisors, or if you have recently acquired a rental property, here are typical set up fees-

Rental Setup, Existing Rental Prior to 2025 (unless nutty asset listing) $125 ea
Rental Setup, New Rental Purchased in 2025 (yay!) $200 ea
Rental Setup, New Short Term Rental Purchased in 2025 $250 ea
Add On: Cost Seg Setup, New Rental in 2025 $150
Add On: Rental Acquired in a 2025 1031 Exchange $250
Add On: Rental Acquired before 2025 in a 1031 Exchange $350
Add On: Commercial, 4-Plex, Apartments, Several Assets varies

Ok, neat. Should we run through some examples?

Rental Setup Examples

You are new to WCG (yay) and you purchased a rental property in 2024 that is a short-term rental and you did a cost segregation study as well. Your setup fees would be $250 + $150 = $400.

You are new to WCG (double yay), and you purchased a rental property in 2024 through a 1031 like-kind exchange and you did a cost seg as well. Your setup fees would be $125 + $150 + $250 = $525.

You are new to WCG (more yay) and you have 2 existing rentals with 1 as an STR, and you acquired one of the rentals with a 1031 like kind exchange a few years ago. Your setup fees would be $125 x 2 + $350 = $600

You are new to WCG (we sense a theme!) and you have 3 existing rentals with 2 as STRs, and you did 1 cost segregation study today on a rental property that has been in service since 2022 (and therefore you also need a Form 3115 Change in Accounting Method, see below). Your setup fee would be $125 x 3 + $625= $1,000.

Yes, we can offer some discounts or economies of scale.

Why Have Setup Fees?

Why do we have setup fees at all? We must ensure your prior depreciation is correct (especially if acquired with a 1031 exchange), all assets are correctly identified with original cost basis including acquisition costs, and loan amortization is properly recorded. We see a lot of junk out there which is not big deal until you want to sell the rental property, and minimize your tax pain.

Why do we charge extra for short-term rental setups? They are more intensive because there are more questions that need to be answered from us (and from you!), and we have to comb through furnishings and other boot up expenditures to ensure they are properly handled.

Why would I need a 3115 with a cost segregation study? If your rental property has already been in service and tax returns have been filed, then we need to request permission from the IRS to basically accelerate your depreciation on your current tax return. Alternatively we could amend your prior tax returns which is messy and expensive. Also, there is some tax arbitrage potentially if your income is higher today than it was when you first purchased your rental property. Lots to discuss here!

Why do we charge extra for a rental property acquired in a prior year 1031 like-kind exchange? We need to confirm that the previous tax professional computed the exchange correctly since once we prepare the tax return, we own the data including prior data.

Rental Property Tax Return Preparation

Here are typical rental property tax prep fees that might be added to your individual tax return (Schedule E reported on Form 1040) or partnership tax return (Form 8825 reported on Form 1065)-

Rental Tax Prep, Prepared Financials (Rental Bookkeeping) $100 ea
Rental Tax Prep, Clean DIY Records (The SRO Template) $150 ea
Rental Tax Prep, Complex or Messy Records (disguised disorganization) $200 ea
Add On: Existing Rental converting to STR $75
Add On: Streamlined State Tax Return (in addition to your resident state) $125 to $200
Add On: Complex State Tax Return (see below for what makes complex, complex) $250 to $400
Add On: Cost Seg Setup + 3115 / 481(a) Calc, Existing Rental Prior to 2025 $625
Add On: Short-Term Rental Activities (non-investor patrol) $75
Add On: Rental Property Sale $250
Add On: 1031 Like-Kind Exchange and New Setup $450
Add On: Complex 1031 (2:1, 1:2) and New Setup(s) $750

Rental Tax Prep Examples (in addition to set up fees above)

You purchased a rental property in 2024 that is a short-term rental and you did a cost segregation study as well. Your recurring tax prep fees would be $75 since the first rental is included in our base fee.

You have 2 existing rentals with 1 as an STR, and you acquired one of the rentals with a 1031 like kind exchange a few years ago. Your books and records are impeccable. Your recurring tax prep fees would be $100 + $75.

You have 3 existing rentals with 2 as STRs. Your rental property records are incredibly tight and you use our SRO template, and therefore your recurring tax prep fees would be $100 + $100 + $75 + $75 = $350.

You are a returning client to WCG (thank you) and you had a long-term rental from 3 years ago and you recently converted it to a short-term rental in 2024, and you also performed a cost segregation study so you need a Form 3115 Change in Accounting Method). Your tax prep fees would be $75 + $625= $700.

There are a million different examples, and Yes, some of this is based on the judgement such as clean records versus messy records (no, not you, of course not, right?). Please keep in mind that our base tax return preparation fee includes rental #1. Also, we will offer discounts for several rentals such as 6 or more.

State Tax Return Complexity

You live in Colorado and have a rental property in California. You will need to file a California non-resident tax return even if the rental loses money. You have an income-generating asset in their state. Also, please consider that a taxing jurisdiction has the right to inspect your books and records to ensure your loss is truly a loss.

Keep in mind that some states and cities consider rental properties to be business ventures like any other, and more are focusing on short-term rentals as well. What makes things worse is that some taxing jurisdictions will impose an income tax based on gross rental receipts regardless if the activity is profitable. Yuck.

Here is some other complexity-

  • Several states decouple from the federal tax code, and do not honor bonus depreciation. However, they allow Section 179 expensing which means we must optimize your tax position between bonus and Section 179. This in part means that you could have a federal tax loss yet have a taxable state profit.
  • Many states require a file tax return to record net operating losses or other passive activity losses for carryover and future use purposes such as future rental income (profit) or sale.
  • California does not allow for real estate professional status and passive activity loss deductions.
  • Some states require property managers to withhold income taxes based on gross rent, and they often mess it up (adding back-end complexity).
  • 1031 like-kind exchanges across state lines are messy, and some states (California) require annual filings into perpetuity until the property is sold (and they get paid).

While we have your attention or perhaps even your interest, please read our State Problems With Your Rental Property section from our book “I Just Got A Rental, What Do I Do?”

We expand on some of the state issues below as well.

Excel Rental Property Template

Use our Simplified Rental Ops worksheet to record rental activities (the "SRO").

Short-Term Rental Loophole

The STR loophole with average guest stay and material participation.

Partnership Tax Prep (Form 1065)

Do you own your rental with others? Learn about Partnership Tax Returns.

I Just Got A Rental, What Do I Do?

I just got a rental, what do I do? Purchasing a rental property is certainly challenging, but operating one to build wealth and find tax efficiency is equally challenging. This is our second book. Our first book, Taxpayer’s Comprehensive Guide to LLCs and S Corps, was first published in 2014 and was well-received by small business owners and tax professionals, so we thought a book on rental properties and real estate investments would be equally helpful. So, here we are with our second iteration, or the 2025 edition. We update it frequently throughout the year (last update was October 6, 2025).

Our rental property book starts with entity structures and moves into asset management such as acquisition, cost segregation, rental safe harbors, repairs versus improvements, accelerated depreciation, partial asset disposition, and 1031 like-kind exchange. From there we discuss various rental considerations like passive activity losses, short-term rental loophole, real estate professional status, and material participation including what time counts, and what time doesn’t count.

Finally, the good stuff! Rental property tax deductions such as travel, meals, automobiles, interest tracing, home office and common expenses. Fun!

It is available in paperback for $19.95 from Amazon and as an eBook for Kindle for 15.95. Our book is also available for purchase as a PDF from ClickBank for $12.95.

We Are Real Estate CPAs

WCG has a team of real estate CPAs ready to assist you with your rental property and real estate investments. Very few tax professionals and CPA firms specialize in real estate to provide you solid consultation, tax planning including tax reduction strategies, and tax return preparation. We are experts in-

This book is written with the general rental property in mind. Too many resources tell you the general rule but don’t bother to back it up with Internal Revenue Code, Treasury Regulations and Tax Court cases. Our book lays it all out, explains the madness, adds some humor and various conundrums. Example? Water heaters and hot tubs- crazy stuff to consider.

Enjoy! And please send us all comments, hang-ups and static. This book is as much yours as it is ours, except the tiny royalty part- that’s ours. Stop by and we’ll buy you a beer with the pennies.

How To Purchase Our Rental Property Book

If you buy our 480-page book and think that we didn’t help you understand rental property tax laws, let us know. We never want you to feel like you wasted your money. If you are ready to add some insightful reading into your day, click on one of the preferred formats. Amazon is processed by Amazon, and the PDF is safely processed by ClickBank who will email you the PDF as an attachment.

$19.95 $15.95 $12.95

In Closing

If you have any questions, please feel free to call us at 719-387-9800 or email [email protected]. Thanks again for your time- We look forward to working with you!!

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