What the IRS says about rental records
The IRS page on rental real estate recordkeeping says to maintain good records relating to your rental activities, including the rental income and the rental expenses, because you must be able to back up this information if your return is audited. It adds that you generally need documentary evidence, such as receipts, canceled checks or bills, to deduct an expense.
It also says records help you monitor how the property is performing and prepare financial statements. Bank statements are one source for these records, because rent received and many costs pass through a bank account.
This is general information, not tax, legal or financial advice. Check the linked IRS pages, such as Publication 527, for your situation, and ask a qualified tax professional if unsure.
What counts as rental income and expenses
IRS Publication 527 lists several kinds of rental income beyond monthly rent. They include advance rent, payments to cancel a lease, expenses your tenant pays for you, property or services received instead of rent, and security deposits you keep because the tenant broke the lease. IRS Topic 414 adds that security deposits you must return are not income.
The same publication lists common rental expenses: advertising, auto and travel, cleaning and maintenance, commissions, depreciation, insurance, interest, legal and professional fees, management fees, mortgage interest, repairs, taxes and utilities. It also says that if you use the property personally some of the time, you must divide your expenses between rental and personal use.
Not every item above appears as a clearly labelled bank line. A tenant's payment of your utility bill, for instance, may never touch your account, so a bank statement alone will not capture all of it.
Turning statements into a rental ledger
Once a statement is converted to a spreadsheet, each transaction is a row. Add a "Property" column and a "Category" column, then fill them down using the categories above. A synthetic example:
Date Description Amount Property Category
01/03/2026 Deposit - Unit A tenant 1,200.00 Unit A Rent received
01/09/2026 Example Plumbing Ltd -185.00 Unit A Repairs
01/15/2026 Example Insurance Co -92.50 Unit A Insurance
01/20/2026 Deposit - Unit B tenant 1,050.00 Unit B Rent receivedA pivot table or SUMIFS formula can then total each category per property per month. Having the total next to the supporting statement line makes it easier to find the original document when you need it.
Mortgage payments often combine principal, interest and escrow in a single line. The bank statement shows only the total, so you will need the lender's own statement to split them. Likewise, a payment that mixes repairs and an improvement may need an invoice to categorise it. Publication 527 notes that you should keep records that separate repair costs from improvement costs.
Keep the originals, and keep rental money separate if you can
A spreadsheet is a working summary. It is not a substitute for the receipts, invoices and statements the IRS describes, and we are not claiming it satisfies any requirement. Keep the original documents and note which one each row came from.
Using a bank account only for the rental makes the statement much easier to read, since personal spending is not mixed in. The IRS pages we read do not require this for rentals, but IRS Publication 583 recommends a separate business checking account for businesses generally, and the same logic helps here. PDFtoRow can convert your statement PDFs to Excel or CSV to start the ledger.
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Frequently Asked Questions
The IRS says you generally need documentary evidence such as receipts, canceled checks or bills to deduct an expense. A statement shows that money moved, but you may also need the invoice or receipt showing what it was for.
According to IRS Topic 414, security deposits you must return are not income. Amounts you keep, for example because the tenant broke the lease, are included in income in the year you keep them.
IRS Publication 527 says you must divide your expenses between rental and personal use, and that your rental deductions may be limited.
Primary Evidence & Official References
- Tips on rental real estate income, deductions and recordkeeping — irs.gov (Verified 2026-10-29). Official source documentation →
- Publication 527, Residential Rental Property — irs.gov (Verified 2026-10-29). Official source documentation →
- Topic no. 414, Rental income and expenses — irs.gov (Verified 2026-10-29). Official source documentation →
- Publication 583, Starting a Business and Keeping Records — irs.gov (Verified 2026-10-29). Official source documentation →