Cash vs. accrual accounting for rental property
5 min read
"Cash or accrual" sounds like an accountant's question, but it changes what your reports say. Here's the difference in landlord terms, and how to decide.
Cash basis: money when it moves
On a cash basis, you record income when rent actually hits your account and expenses when you actually pay them. It's simple and mirrors your bank balance, which is why many smaller landlords start here.
The trade-off: timing can distort a month. Prepay an annual insurance premium in January and that month looks terrible, even though the cost covers the whole year.
Accrual basis: money when it's earned or owed
On an accrual basis, you record rent as income in the month it's due (whether or not it's paid) and expenses in the period they relate to. This smooths out timing and shows the true economic picture of each month.
Accrual is what makes accounts receivable meaningful — you can see rent that's earned but unpaid, which is exactly the delinquency you want to chase.
Which should you use?
Many landlords keep day-to-day books on cash basis for simplicity, but want accrual views for management and lenders. Larger operations and most GAAP-style reporting lean accrual.
The practical answer: use software that reports both from the same data, so you're never locked into one view. This is general information, not tax advice — confirm your filing basis with your accountant.
Do it without keeping two sets of books
The mistake is maintaining cash books and accrual books separately. With a real double-entry ledger, both reports come from the same underlying transactions — you just flip the basis on the report.
In Rentwelly, every report has a cash/accrual toggle, so you get the simple view and the true-timing view without re-entering anything.
See it in your own books
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