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Year-end close for rental property books: a checklist before you send them to your tax preparer

DoorKeeping team

4 min read

A year-end close is the monthly close done once more, with extra steps: reconcile every bank account through December 31, make sure all twelve months are closed, check security deposits and prepaid rent, review contractor payments for 1099-NEC forms, sort repairs from improvements and then export the package your tax preparer needs. Start in early January, because 1099-NEC forms are due January 31 and the rest follows from clean books.

What a year-end close adds to the monthly one

If you close every month, December is mostly familiar. The year end adds checks that only make sense once, such as making sure the opening balances of January match the closing balances of December, reviewing the year's contractor payments in one list, and checking that the depreciation schedule includes anything bought this year.

If you do not close monthly, this is the step that takes a weekend. Close one month at a time, oldest first, so that errors do not compound.

The checklist

  1. Reconcile every bank, credit card and loan account as of December 31 and match the statement balance to the books.
  2. Confirm all twelve months are closed and no one can post into a closed month without a record.
  3. Clear the uncategorized list: every transaction needs a property and a Schedule E line.
  4. Check security deposits: the deposits held in the books should equal the deposits held in the bank, tenant by tenant.
  5. Check prepaid rent. Rent received in December for January is generally reported by cash basis owners when received, and your tax preparer will confirm the treatment.
  6. Sort repairs from improvements. Large jobs go to your tax preparer as possible depreciation items, with invoices.
  7. Add this year's purchases and sales to the depreciation schedule: closing statement, date placed in service and cost.
  8. List every contractor you paid and check that each has a tax form on file.
  9. Run the property reports: profit and loss by property, rent roll at year end, and the Schedule E totals.
  10. Export the package and keep a copy.

Contractor payments and the January 31 deadline

If you paid contractors for your rental business, you may need to file Form 1099-NEC and give each contractor a copy. The filing and the copy to the contractor are generally due January 31. The IRS lists the rules, thresholds and exceptions in the Instructions for Forms 1099-MISC and 1099-NEC. Thresholds change, so read the current instructions or ask your tax preparer instead of relying on a number you remember.

Collect a Form W-9 from every vendor before the first payment. Chasing a W-9 in January is slow, and a missing one is a good reason to start in the fall.

What to hand your tax preparer

  • Profit and loss for each property, with every line mapped to Schedule E.
  • Rent roll at December 31, and the year's rent received by unit.
  • Bank reconciliations for December.
  • Mortgage interest statements (Form 1098) and property tax bills.
  • Settlement statements for any purchase or sale this year.
  • A list of repairs over a few thousand dollars, with invoices, flagged as possible improvements.
  • Contractor payment totals and any 1099 forms filed.
  • The operating agreement and ownership changes, for multi-member LLCs.

Example a made-up owner has 3 LLCs. At year end, the Elm Street books show a $25,400 security deposit liability, and the bank account shows $25,400 of deposits held, so they agree. Oak Court shows $18,000 of deposits in the books but $17,600 in the bank, a $400 gap. The year-end close finds a tenant's deposit that was spent on a repair and never recorded as income. It is corrected before anything is sent.

How DoorKeeping handles it

DoorKeeping runs the month-end close all year, so the year-end close is the December close plus one extra review. The year-end screen lists unreconciled accounts, uncategorized transactions, deposits that do not match the bank and vendors without a tax form. It flags large repairs as possible improvements for your tax preparer.

The year-end package, with a profit and loss and Schedule E report for each property, the rent roll, the 1099-NEC report and the general ledger, downloads as one set, and your accountant can be given read-only access instead. You can ask Claude or ChatGPT "what is left to do before I can close the year". Rent and payments stay in your own bank accounts. DoorKeeping never holds your money and sends a payment only when you approve it. The price is $2 per unit a month with every feature included. DoorKeeping gives no tax advice and does not e-file 1099 forms.

Sources

  1. IRS Instructions for Forms 1099-MISC and 1099-NEC, read Oct 30, 2026
  2. IRS Publication 527, Residential Rental Property, read Oct 30, 2026

Questions

When should I start the year-end close?
Start in early January for the books, and start collecting W-9 forms and contractor totals in the fall. 1099-NEC forms are generally due January 31.
Do I need to close the books if I use cash accounting?
Yes. Cash accounting changes when income and expenses count, not whether the books need reconciling and reviewing.
What do I give my accountant at year end?
Profit and loss by property mapped to Schedule E, the rent roll, bank reconciliations, loan and tax statements, closing statements and a list of large repairs with invoices.
Does DoorKeeping file 1099 forms?
It produces the 1099-NEC report from your books. Filing is done by you or your tax preparer.

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