Year-End Checklist for Landlords: What to Gather Before December 31

Most rental owners start thinking about taxes in April. By then the year is closed. Every repair has already been booked as a repair or an improvement, every receipt either exists or it doesn't, and the only thing left to do is report what happened.

The better time to get organized is now, with about ten weeks left in the year. Here's the year-end checklist we'd want every owner working through before December 31, and why the conversation with your CPA belongs in November, not April.

Nothing here is tax or legal advice. Tax rules change, and every owner's situation is different. Talk to your CPA or tax professional before you act on any of this.

1. Your Income Records

Start with what came in. The IRS calls Schedule E (Form 1040) the basic form for reporting residential rental income and expenses, and it's built property by property. Your records should be, too.

Owner statements. Pull all twelve months of owner statements for each property and make sure they tie to your bank deposits. If we manage your rental, your monthly operating statements are in the owner portal, itemizing income and expenses.

Form 1099-MISC from your property manager. IRS instructions say a property manager must use Form 1099-MISC to report the rent paid over to the property owner, and the rent threshold is $2,000 for payments made after December 31, 2025. Make sure your manager has your correct legal name, taxpayer ID, and mailing address now. A mismatched W-9 is a January headache nobody needs.

Security deposits. Per IRS Publication 527, a deposit you plan to return isn't income when you receive it. If you keep part or all of it because the tenant didn't live up to the lease, the amount you keep is income in that year. A deposit that's really meant as the last month's rent is advance rent, and that's income when you receive it. Know which deposits were kept this year, and why.

2. Every Receipt, Sorted: Repairs vs. Improvements

This is the sorting job that matters most, and it's much easier in October than in March.

Publication 527 says you must capitalize any expense you pay to improve your rental, meaning anything that's a betterment, a restoration, or an adaptation to a new use. Its examples of improvements include a new roof, a furnace, a water heater, flooring, wall-to-wall carpeting, and a fence. Improvements are generally depreciated over time. Ordinary repairs that keep the property in good working order are generally deducted as expenses.

The IRS is direct about what to do: separate the costs of repairs and improvements, and keep accurate records, because you'll need the cost of improvements when you sell or depreciate the property.

There are also safe harbors that can change how some of these costs are treated. The IRS tangible property regulations include a de minimis safe harbor of up to $2,500 per invoice or item for taxpayers without applicable financial statements, a routine maintenance safe harbor, and a safe harbor for small taxpayers with building property of $1 million or less in unadjusted basis. These are elections made on the return, each with its own requirements. Ask your CPA whether any of them fit your situation before you schedule a big replacement for December versus January.

3. Mileage

If you drive to your rental to collect rent, check on a repair, or show the unit, keep track of it. Publication 527 says ordinary and necessary local transportation to collect rental income or to manage, conserve, or maintain the property may be deductible. It also says trips between your home and the rental are generally nondeductible commuting unless your home is your principal place of business. That's a question for your CPA, not a guess.

You can generally use actual expenses or the standard mileage rate. For 2026, the IRS business standard mileage rate is 72.5 cents a mile for January 1 through June 30, and 76 cents a mile for July 1 through December 31. Because the rate changed mid-year, a log with dates matters more than usual. If you haven't kept one, rebuild it from your calendar and texts now, while you still remember the trips.

4. Contractor Information and 1099s

If you paid contractors directly this year, gather their W-9s now, not in late January.

The 1099-NEC threshold changed. The IRS says payments of $2,000 or more for payments made after December 31, 2025 (up from $600) made in the course of a business to a non-employee for services are reported on Form 1099-NEC. The Form 1099-NEC instructions require filing by January 31.

Whether you personally have to file 1099s depends on whether your payments are made in the course of a trade or business. That's a CPA question. Either way, having every vendor's legal name, address, and taxpayer ID on file makes January simple.

5. Insurance, Mortgage, and Property Tax Paperwork

Insurance. Keep the declarations page and proof of premiums for each property. Publication 527 notes that if you prepay a premium for more than a year, you can only deduct the part that applies to each year.

Mortgage. Watch for your lender's Form 1098 and your annual escrow statement.

Property tax. South Dakota property taxes are paid a year in arrears. In Pennington County, the first half becomes delinquent if not paid by April 30 and the second half if not paid by October 31. If your mortgage company pays through escrow, the county still mails you a tax notice, and the county notes it may be useful when reporting property taxes paid to the IRS. Keep it, and confirm the second-half payment actually posted.

6. South Dakota Owners: Federal Return and Property Tax Are the Focus

The South Dakota Department of Revenue says South Dakota is one of seven states that doesn't impose a state income tax. For a South Dakota owner with South Dakota rentals, that means year-end paperwork mostly comes down to two things: the federal return and the property tax.

If your rental is in Montana or another state with an income tax, or you live in one, the picture is different. Check your state's rules, and ask your CPA which state returns your rentals touch.

7. Keep the Right Records for the Right Length of Time

The IRS says records connected to property should generally be kept until the period of limitations expires for the year you dispose of the property. That means the roof receipt from this year could matter a decade from now when you sell. Scan it, label it by property and year, and store it somewhere you'll still be able to find it.

Your Year-End Checklist

• Twelve months of owner statements, reconciled to bank deposits

• Correct name, taxpayer ID, and address on file with your property manager

• A list of security deposits kept this year, with the reason for each

• Every receipt, sorted into repairs and improvements, by property

• A dated mileage log for rental trips

• W-9s for every contractor you paid directly

• Insurance declarations pages and premium receipts

• Lender Form 1098 and escrow statements

• Property tax notices, with the second-half payment confirmed

• A meeting on your CPA's calendar before December 31

Talk to Your CPA Now, Not in April

In April, your CPA can only report what already happened. In November, they can still help you decide what happens: whether a replacement lands this year or next, whether a safe harbor election makes sense, and what records they'll need from you. That's the whole point of doing this before December 31.

Why This Matters

Good books don't just make tax season easier. They show you which property is actually earning its keep, what maintenance really costs, and where the money went. That's a real system, not a shoebox.

Want your rental's numbers this easy every year?

Clean monthly statements and organized records are part of how we manage every property. Want to know what your rental should actually be earning? Get a free rental analysis. Let's talk. Blair Allen Property Management serves owners across South Dakota and Montana.

Chris Twiggs
President, Blair Allen Property Management
📞 605-545-1218
✉️ chris@blairallen.com