Short answer: Rental property bookkeeping in Riverside records gross rent for each property, before management fees and repairs. The City of Riverside bases its business tax for landlords with more than one residential unit, and for commercial landlords, on gross rental receipts. Properties inside and outside city limits stay apart, so the city figure is easy to pull.
How Riverside treats landlords
The City of Riverside says any property owner renting residential or commercial real estate in the city must hold a business tax certificate. For residential owners, the tax applies once you have more than one rental unit. Anyone who rents or leases commercial property in the city is subject to it too.
In both cases the city works from gross rental receipts. Its rates use a minimum tax plus increments that depend on the type of business. That means the number your books must produce is rent collected, not what is left after the property manager, the gardener and the plumber are paid.
Rates change each year. Check the City of Riverside Business Tax Office for current figures and your category.
When the second unit changes things
Many Riverside landlords start with one house. Buying a second unit, adding an ADU or converting a garage can move an owner into the taxed group. The city says a new business pays its tax on or before the first day of business, and it lists penalties for new businesses that grow from 30% at 60 days after the start date to 75% at 120 days.
In the books, the start date is easy to find: it is the first rent deposit from the new unit. Recording that date, the certificate number and the payment keeps the timeline clear if the city ever asks.
Buying a building with tenants
Riverside says business tax certificates cannot be transferred or assigned to another person or business. When you buy a rented duplex, a fourplex or a small retail strip, the seller's certificate does not come with it. You apply in your own name.
Closing also brings tenant deposits, prorated rent and prepaid items onto your books. The settlement statement is the source for each one. Deposits you take over are a liability, prorated rent is income for your share of the month, and the purchase price is split between land and building for your CPA.
What Riverside rental books track
- A class or tracking category for every property, with a tag for inside or outside city limits
- Gross rent by unit, before management fees, repairs or any other deduction
- Management statements entered in full, with fees and repairs as separate expenses
- The city certificate number, payment date and renewal date for each certificate you hold
- Security deposits held as a liability by unit
- Settlement statement items from each purchase recorded line by line
A typical Riverside cleanup
An owner has a duplex near UC Riverside, a house in Riverside's Arlington area and a condo in Corona. A property manager runs all three and sends one deposit a month, net of fees and repairs. QuickBooks shows that deposit as rent. When the city asked for gross rental receipts, the owner had no way to separate Riverside rent from Corona rent, or rent from expenses.
The cleanup works from the manager's owner statements. Each month's rent is entered by unit at the full amount, and fees, repairs and reserves are recorded as their own entries. The three properties get their own classes, and the two Riverside properties are tagged as inside city limits. Now the city figure is one report, and the CPA gets income and expenses by property for Schedule E.
The monthly close for a Riverside landlord
- Collect statements Owner statements from the manager, plus bank and loan statements, come in after month end.
- Gross up rent Each unit's rent is entered in full, with fees and repairs on their own lines.
- Tag the city Properties inside Riverside city limits are tagged so their gross rent totals stay current.
- Report You get a profit and loss by property and a running total of Riverside gross rental receipts.
Questions
I rent out one house in Riverside. Do I pay the city business tax?
The city says residential owners with more than one rental unit are subject to the tax. Ask the Business Tax Office how it applies to a single unit or an ADU.
Does the city want gross rent or net rent?
The city bases the landlord tax on gross rental receipts. That is rent collected before management fees, repairs and other expenses.
Can I use the seller's certificate when I buy a rental building?
No. Riverside says certificates cannot be transferred or assigned. Apply in your own name after closing.
My property manager sends one net deposit. Is that enough?
Not for the city figure or for Schedule E. The manager's owner statements show gross rent and every deduction, and the books are built from those.