Real estate accounting – basics start with clean records for every property, because the tax return is only as good as your paperwork.
Real estate bookkeeping: set up a simple system first
If you collect rent, you are running a small finance operation. Don’t treat it like “notes in a folder”.
Create:
- One bank account for property activity (or one per property if you can).
- One folder per property for leases, invoices, and statements.
- A monthly close date (for example, the 5th of each month).
Track these items every month:
- Rent billed vs. rent received (include void periods).
- Letting/management fees, insurance, repairs, utilities for empty periods.
- Tenant deposits and where they are held.
This is the minimum that makes bookkeeping for realtors and landlords usable in practice.
Accounting for real estate transactions: what to record when money moves
Property accounting gets messy when you mix “day-to-day costs” with “asset changes”.
Record each transaction with:
- Date, vendor, amount, property, and purpose.
- Supporting file (invoice, contract, statement screenshot).
- A category that matches your tax logic (repair, improvement, finance cost, professional fees).
Example:
If you replace a broken boiler, it’s usually a repair expense. If you install heating where none existed, it’s closer to an improvement and may need different tax treatment.
Real estate taxes on rental property: the numbers that drive your return
Your taxable rental profit is basically rent minus allowable costs. But two details trip people up.
- Mortgage interest: mortgage interest is generally handled as a 20% tax credit, not a straight deduction from rental income.
- Reporting threshold: there is a £1,000 property allowance concept; above it, you normally report and keep full records.
Also, build your budget with upfront taxes in mind. SDLT surcharges can change the real cost of a “good deal”.
Real estate depreciation and capital allowances
In the UK, “real estate depreciation” often shows up as capital allowances on qualifying fixtures rather than a straight-line schedule.
What this means:
- The building structure usually doesn’t qualify.
- Fixtures and fitted items sometimes do (kitchens, bathrooms, heating systems).
- Claims need evidence and careful classification.
If you do large refurbishments, this is one of the areas where a real estate tax accountant can pay for themselves.
Capital gains tax rate on real estate investment property: sale-day checklist
When you sell, you’re in a different tax world. Your gain is sale price minus purchase price, minus improvement costs, minus selling costs.
Key points:
- The capital gains tax rate on real estate investment property is stated as 18% (basic rate) and 24% (higher rate) for residential property.
- CGT is reported and paid within 60 days of completion through HMRC’s online service.
Practical tip: keep a running “improvements log” during ownership, not at sale time.
Accounting software for realtors and agents
Accounting software for realtors is useful when it reduces manual entry and gives you property-level reporting. The same logic applies to accounting Software for real estate agents and commissions-based teams.
Must-have features:
- Bank feed import and rules (less typing, fewer errors).
- Profit and loss by property/unit.
- Tenant ledger (rent, arrears, deposits) updated as you post transactions.
- Tax-year report that matches UK self-assessment logic.
QuickBooks for real estate management is commonly used for bank feeds and reporting.
Bookkeeping software for real estate agents is still just a tool. It won’t catch a misclassified improvement.
Real estate accounting services vs. DIY software
A basic filter:
- Under ~5 straightforward properties: software plus an annual review can work.
- Commercial real estate accounting, mixed use, complex ownership, frequent sales/refis: ongoing real estate accounting services make more sense.
Commercial property can add layers like service-charge reconciliation and VAT considerations.
Realtime payroll for property staff
If you employ staff (property manager, caretaker, maintenance), realtime payroll reporting to HMRC is part of RTI rules, and late or incorrect submissions can trigger penalties.
When to hire accountants for real estate (a quick filter)
Consider a real estate tax specialist when you have:
- Multiple properties with different ownership structures.
- Big refurbishments where capital allowances may apply.
- A sale is coming up and you need CGT planning.
- A compliance issue or HMRC enquiry.
And keep evidence for the long haul. Digital receipts and statements should be stored for six years.
Having trouble managing your property finances or unclear about your tax obligations? Expert real estate accounting services offer the insight and strategic guidance essential to protect and grow your investments. Reach out today for a personalized consultation designed around your unique portfolio.
