Owning a property as an investment can be lucrative, but it can also come with a lot of financial management hassles.

Whether you use a short-term rental marketplace like Airbnb, HomeAway, VRBO, or FlipKey; rent directly to tenants; or hire property manager like Century 21 or Coldwell Banker, there’s often money left on the table that could be in your pocket. The culprit is likely poor expense management.

Investment properties are vehicles to building wealth. Tax laws exist to help you make the most of these investment vehicles. Therefore you need to treat this like you would a business. The product is your property.

Like a business, you also need to spend money to make money. Therefore your wealth strategy should not only focus on income but also the tax advantages you get from claiming deductibles against your taxable income.

What a landlord needs to know to maximize tax deductions

You’ll have a much easier time with taxes on your short-term vacation or rental property if you treat it as a business from the get-go and keep meticulous records. Here are the basics:

  1. Expenses (collecting receipts, bills, et al.)
    You are entitled to deduct all “ordinary and necessary” expenses to operate your rental business. If you buy new towels for your guests, repaint the guest-room or put a bottle of wine on the table for incoming guests, you can deduct these expenses from your rental income.
    By keeping clear records and recording all money you spend on the property (your business), you won’t have to go back through bank statements for proof when filing taxes.
  2. Logging Mileage (business use of your personal car)

The industry term for all this is bookkeeping. It’s usually boring and time-consuming, but it doesn’t have to be that way. That’s why Veryfi is here.

[Watch] Adding your Airbnb transactions into Veryfi

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[1] Expenses (collecting receipts, bills et al.)

Veryfi app helps you collect all expenses and income. All you need to do is capture those documents by either taking a picture, emailing to your unique Veryfi email, using cloud storage to push documents to Veryfi, or uploading the Airbnb transactions ledger.

Deductibles you need to track;

  • You’ll find a ton of expenses related to your rental investment that can be claimed as deductibles come tax time. Just make sure you have receipts for proof — another reason to use a flawless bookkeeping process like Veryfi.
  • Advertising your property for rent
  • Cleaning and maintenance services, including laundry and cleaning supplies purchased
  • Utilities like gas, electricity, TV, internet, garbage collection, etc.
  • Property insurance, in addition to building and content coverage
  • Council bills (usually quarterly in Australia)
  • Acquisition and disposal costs, including the purchase cost, conveyancing and advertising costs and stamp duty
  • Guest-service fee or a host-service fee taken off the top of the rent that guests pay when using Airbnb and other short-term rental marketplaces
  • The cost of managing the property (i.e., legal fees and accountancy fees incurred by the host in connection with renting the property)
  • Strata / homeowners’ association (HOA) fees
  • Cleaning bills (these will be regular if your property is rented via Airbnb and the like)
  • Repairs, i.e. fixing broken windows, doors, furniture and machines, etc.
  • Property management costs (if you are renting long- or short-term via Airbnb and the like)
  • Registration fees for relevant conferences or education on property management (i.e., Airbnb Open)
  • The cost of your Veryfi PRIME subscription

All these deductibles help reduce your taxable income. Like I said earlier, your wealth strategy should not only focus on income. It should include the claimed losses that would have reduced your taxes and put more money in your pocket.

Losing a receipt is like losing money.

The Veryfi Android app was recently featured as the best top 20 Android apps in 2018. Check out how simple it is to collect receipts using the Veryfi mobile app. The same experience is also available on the iOS.

And if you want other ways to collect receipts there is also Email, Dictation via Watch and Dropbox Reverse Cloud Sync (RCS).

Importing the Airbnb transactions ledger

  1. Export your Airbnb ledger from Airbnb.com account screen as a CSV file,
  2. Log into Verify Web App (Hub) https://hub.veryfi.com/documents/ and follow the screenshot instructions below.
  3. Within minutes all those expenses in the Airbnb ledger will appear imported in your Veryfi Documents ledger alongside the other expenses.

Veryfi web app uploading Airbnb transactions ledger
Next…

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[2] Logging Mileage

Whenever you drive your personal vehicle for:

  • Property inspections,
  • Research new investment opportunities,
  • Hardware shops for renovations or fixes to the property, etc..

.. you need to keep track of your car’s mileage. Use Veryfi’s Logbook app to automatically track all those drives. Then reinvest that money back into your real estate portfolio.

This is the simplest app you will ever use. Once installed & setup you forget about it. When you drive it will automatically pick up the drive and after the drive is done, Veryfi logbook app will send you an alert to categorize the drive. That’s it.

Veryfi Logbook Mileage Tracker mobile app screenshots

In Summary

The tools I presented here all integrate together.

So there is no need to do any API connections, learn new interfaces or have multiple logins. One login gets you into the 2 mentioned apps (Veryfi Core and Veryfi Logbook) and also into the Web App which is a unified Hub of all those services in a desktop experience for larger screens.

To get started signup here

Veryfi.com ~ your total bookkeeping solution

A great list of additional resources

Ernst and Young’s “General guidance on the taxation of rental income,” prepared for Airbnb landlords
https://assets.airbnb.com/eyguidance/us.pdf

Publication 527 (2016), Residential Rental Property by IRS (American landlords)
https://www.irs.gov/publications/p527

Residential rental properties by ATO (Australian landlords)
https://www.ato.gov.au/General/Property/Residential-rental-properties/

Articles on Veryfi Logbook Mileage Tracker & Reimbursement Rates
https://www.veryfi.com/vehicle-logbook/

Many ways to collect documents using Veryfi
https://www.veryfi.com/collection-methods/

Have questions?

If you have further questions please reach out to me directly on ernest@veryfi.com.

NOTE: Tax advice is complicated, and you should do your own due diligence when receiving advice. Veryfi is not responsible for any tax or other advice provided by any outside entity.

~ Ernest Semerda
Veryfi Cofounder

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