How to book tenant utility revenue

The IRS requires that almost all funds you receive from tenants be recorded as revenue. This includes payments for utilities and cleaning fees for short-term rentals. The few exceptions to this rule include security deposits and some short-term occupancy taxes.

So, if your tenants pay you for utilities, you must book those funds as revenue. You are welcome to use the Tenant Fees account or update the chart of accounts and create a new revenue account if desired.

Booking tenant utilities to its own account or subaccount can help you see and understand your revenues better. However, that separation is not a requirement for your taxes. The IRS Schedule E only has one revenue category for rentals - Rents Received. So, ultimately, at tax time, all of your revenues will be rolled together on a per-property basis.

Make sure you continue to book the utility bills you pay as expenses to offset the revenue you are entering from tenant utility payments. This ensures a net zero impact on your taxable income.

Please reach out to the REI Hub support team with any questions!