There is actually no rule that says you must take your rental income to pay your rental expenses 💸🤑
For many landlords that is what we do. The rental income comes in, likely on the 1st of the month, and then you deposit it into your account.
Probably an account dedicated to rentals and then you pay your expenses on the property from the same account.
We keep our rental income and expenses separate and intuitively, it makes sense because that’s what we have been taught to do.
But when you do it that way, you miss this wonderful opportunity to create additional tax efficiencies for yourself.
There’s actually no rule that says you need to use your rental income to pay your rental expenses.
When you receive the income from your tenant, it’s yours. You can do whatever you want with it.
This takes a minute to get comfortable with because the natural tendency is to use the rental income to pay the rental expenses, that just makes sense…
But there’s a better way to manage the cash flow.