Year-End Bookkeeping Checklist for Landlords — What to Do in December

Most landlords treat year-end as a tax problem and start it in February. By then every useful move is gone. You can't collect a W-9 from a plumber who has stopped answering your texts, you can't pay January's property tax in December anymore, and nobody remembers what the $340 Lowe's charge in August was for.

Year-end is a bookkeeping problem, and December is when you have the most room to fix it. The checklist below is in the order to do it, because the order matters. Reconcile before you categorize, categorize before you total, and total before you decide anything about timing. Do it the other way round and you'll be making tax decisions on numbers that are about to move.

Week 1: get the cash right

Nothing else on this list means anything until your books agree with your bank.

Reconcile every account through November. That means every checking account, every credit card used for the rentals, and the security-deposit account if you keep one. Use the actual statement, not a screen balance. If a month earlier in the year was never reconciled, go back and fix that month first. You can't build December on an unverified base. The bank reconciliation walkthrough has the routine. The short version is that every unexplained difference is a duplicate, a missing transaction, a wrong amount, or something you recorded that the bank never saw.

Hunt the specific year-end errors. Twelve months of bank feed leaves the same debris every year:

• Rent recorded by hand and imported from the feed, so it's counted twice
• Bank fees, NSF charges and interest that nobody ever entered
• Transfers between your own accounts booked as income or expense instead of as transfers
• Personal charges on the rental card, and rental charges on the personal one
• A full mortgage payment sitting in "Mortgage Expense" with the principal never split out

That last one is the expensive one. Principal is not deductible, and a full PITI payment booked as expense overstates your deductions every month of the year. When the lender's Form 1098 arrives you'll true up the interest, but the split should already be close.

Reconcile the security deposits three ways. Bank balance, book balance and the sum of what you owe each tenant should all be the same number. If you booked a deposit as income at some point this year, reverse it now. A deposit is a liability, not income. Left in income, it's taxed this year and then untangled at move-out.

Week 2: categorize and clean up

Now that the cash is right, make every transaction mean something.

Clear the uncategorized pile. Every rental books ends the year with a suspense account, an "Ask my accountant" bucket, or a column of blanks. Empty it now while you can still remember what things were. Your CPA will either guess or bill you an hour to ask.

Make the repair-versus-improvement calls. Go through every expense over a few hundred dollars and decide whether it's a repair (deducted this year) or an improvement (capitalized and depreciated). A patched roof is a repair. A new roof is an improvement. The depreciation guide has the test and the two safe harbors. One point to note now: the de minimis safe harbor (expensing items up to $2,500 per invoice or item) is an election you make on the return each year. Tell your CPA you want it, or it doesn't exist.

Log every improvement placed in service. For each one write down the description, the cost, the date it went into service and the invoice. That's the depreciation schedule. Without the date, the first-year deduction is a guess.

Map your accounts to Schedule E. Every expense account should land on exactly one Schedule E line. If "Repairs & Maintenance" is a single account, split it now, because Schedule E separates cleaning and maintenance (line 7) from repairs (line 14). The Schedule E walkthrough has a chart of accounts that maps cleanly.

Split by property. Schedule E reports each property in its own column. If your expenses are tagged to "rentals" in general rather than to a specific property, the CPA will allocate them for you, and their allocation may not match yours. Tag them now.

Week 3: collect from vendors and tenants

This is the part that can't wait until January, because it depends on other people.

Get a W-9 from everyone you paid for services. Plumbers, electricians, handymen, cleaners, landscapers, your eviction attorney. Collect the W-9 before you make the last payment of the year, not after, because a contractor's interest in your paperwork drops sharply once they've been paid. Then pull a list of total payments by vendor for the year and flag anyone who might need a Form 1099-NEC.

Three rules decide who gets one:

The threshold was $600 for decades. Federal legislation passed in 2025 raised it for payments made from 2026 onward, so the number that applies to this December's payments may not be the one you remember. Confirm the threshold for the tax year you're filing with your CPA or the current IRS instructions for Form 1099-NEC before you decide who's under it. Filing a form you didn't strictly need costs little. Skipping one you did need carries a per-form penalty that rises the longer it's late.

The deadline doesn't move. A 1099-NEC is due to the contractor and to the IRS by January 31 (IRC §6071(c); if the 31st falls on a weekend, the next business day). That's why the W-9 has to be in hand in December.

Settle what tenants owe. Run an aged receivables report. For each tenant still owing money, decide whether it's collectible, on a payment plan, or a write-off. If you file cash basis, as most small landlords do, unpaid rent was never income, so there's no bad-debt deduction to take. Writing it off is just recordkeeping. On accrual books the write-off is a real entry with a real tax effect. Either way, the balance shouldn't carry into January without a decision.

Watch for December prepayments. A tenant who pays January's rent on December 28 has handed you December income on a cash-basis return. Advance rent is taxable when you receive it (IRS Publication 527). That's fine. Just don't be surprised when December looks like a 13-month year, and don't book it to January because it "belongs" there. On cash basis it doesn't. The cash vs accrual piece covers why your management books and your return can differ here.

Week 4: totals, then timing

Only now do you look at the bottom line, and only now is it worth deciding anything.

Run a year-to-date P&L per property with the December transactions you can already see. Add depreciation. You now have a rough net rental income figure, and it's the only basis for the decisions below.

Then decide on timing, deliberately. On cash basis, an expense counts in the year you pay it. That gives you a handful of moves, all of which only help if you were going to spend the money anyway:

• Pay the property tax bill before December 31 if it's issued and due around year-end. Many jurisdictions bill in November or December.
• Complete and pay for repairs that were already needed. Paying in December moves the deduction into this year. Paying in January moves it into next.
• Prepaid expenses that run past year-end (a 12-month insurance premium, say) have limits on how much is deductible up front. Ask before you prepay anything beyond the normal billing cycle.

The goal isn't the smallest possible number this year. If you expect a higher income next year, pulling deductions forward can work against you. Look at both years before you spend.

Make the fourth-quarter estimated payment. If rental income isn't covered by withholding, the Q4 federal estimate for the year is generally due January 15. Your state may have its own date, so check your state.

Close out the time logs. If you're claiming the QBI safe harbor (250 hours of rental services) or real estate professional status, the logs have to be contemporaneous. Finish them now from the calendar while the year is fresh. A log rebuilt in March is the kind the IRS expects to disallow. The deductions guide covers both.

January: what arrives, and what the CPA will ask for

Three things show up in your mailbox in late January and early February. Have a folder ready for them.

• Form 1098 from each lender: mortgage interest, and often property tax and insurance paid from escrow. Tie the interest to your books. If they differ, your principal/interest split was off somewhere.
• Form 1099-K from any payment processor that handled rent. It reports gross receipts, which may include deposits, fees and things that aren't rent. Reconcile it to your income so you can explain the difference. Don't just copy the number.
• Property tax receipts and the insurance declarations page if they weren't paid through escrow.

Then send your CPA one package, not a shoebox:

If your books are reconciled and categorized, that package takes an hour to assemble. Corbica produces most of it from the ledger (the Schedule E export, the 1099-NECs and a CPA package), but the routine above is the same whatever software you use.

The short version

• December, not February. The fixes that matter depend on other people and on calendar dates.
• Reconcile first. Every number after that rests on the cash being right.
• Collect W-9s before the last payment. The 1099-NEC is due January 31 to both the contractor and the IRS, and the threshold changed, so confirm it.
• Decide what tenants owe before the balance rolls into a new year.
• Make timing decisions last, on reconciled numbers, and only on money you'd spend anyway.
• Hand over a package, not a pile.

Related reading

• Schedule E for Rental Property — A Bookkeeping Walkthrough
• Bank Reconciliation for Rental Property
• Rental Property Depreciation — How It Actually Works
• Cash vs Accrual Accounting for Landlords

General information, not tax advice. Reporting thresholds, estimated-tax dates and the treatment of prepaid expenses change and depend on your situation. Confirm the current-year rules with your CPA before you file or prepay anything.