How to Do Bookkeeping for Real Estate Business in Canada

March 28, 2025

You can’t invest in real estate without investing in bookkeeping and accounting.

-Steven Cohen, George Dube   

(Legal, Tax and Accounting Strategies…)

Many of our clients excel at finding tenants, identifying profitable investment opportunities, and securing buyers. However, their biggest concern is often filing taxes, maintaining records, and tracking expenses. Numbers are what we use to gauge business success.

“Understanding your numbers is crucial. It’s not just about knowing them, but grasping their significance–otherwise, the lessons might come at a high cost.” –Steven Cohen

This blog deals with some must-have strategies to do proper bookkeeping in your real estate business.

Strategies for Bookkeeping in Real Estate Business

Choose the Right Accounting Method: Cash vs. Accrual

Primarily, there are two accounting methods from which you can choose:

The Canada Revenue Agency (CRA) generally requires businesses earning over $1.5 million annually to use the accrual method. However, smaller businesses may opt for cash accounting for simplicity.

Use Real Estate-Specific Accounting Software

General accounting software like QuickBooks or Xero works well, but industry-specific solutions such as Buildium, Rentec Direct, and AppFolio offer specific features for real estate professionals. These platforms help track rental income, manage expenses, and generate reports for tax filing.

“Good bookkeeping is like a compass.” – Robert Kiyosaki.

Understand GST/HST Obligations

Real estate businesses in Canada must comply with Goods and Services Tax (GST) or Harmonized Sales Tax (HST) rules:

Proper bookkeeping ensures accurate tax collection and remittance to the CRA.

Retain Financial Records for at Least Six Years

The CRA requires businesses to keep financial records for a minimum of six years. This includes:

Digital storage solutions like cloud-based document management systems have revolutionized bookkeeping and they can help organize and secure records efficiently.

Plan for Depreciation

Real estate properties and assets (such as office furniture and equipment) depreciate over time.

The Capital Cost Allowance allows you to take advantage of the respective tax deductions.

Depreciation categories under CRA guidelines include:

Proper tracking of asset depreciation optimizes tax savings.

Expense Categorization

The CRA allows you to deduct certain expenses. However, it is mandatory that you undertake proper categorization to claim them.

Common deductible expenses include:

Mortgage interest
Property taxes
Office rent
Advertising and marketing
Legal and professional fees
Repairs and maintenance
Utilities and Insurance

Appropriate categorization ensures that you claim all deductibles.

Reconcile Bank Statements Monthly

Reconciliation is an important step in maintaining your records. It is better to do it monthly. Some businesses undertake it on a quarterly basis but it is better to do it more often.

Fact: A study by the Canadian Federation of Independent Business (CFIB) found that 30% of small businesses face cash flow issues due to poor financial tracking.

Monthly reconciliation also improves decision-making by providing a real-time snapshot of a company’s financial position. If you identify discrepancies in a timely manner, you can take corrective action before small issues get out of hand.

Understand the Difference Between Bookkeeping and Accounting

Whether you’re a veteran or new to the real estate business, it is crucial for you to understand the difference between bookkeeping and accounting.

Bookkeeping involves organizing and maintaining business records.

Bookkeepers enter and track all income and expenses and use the data to prepare and undertake related filings.

Accounting on the other hand relates to analyzing and organizing bookkeeping data into even more useful information, including financial statements and tax returns. Such data helps businesses and investors understand the where, why and how of the business transactions.

In this regard, it can be beneficial for you to have a qualified accountant on your side.

Concluding Words

Stay proactive in your bookkeeping because doing real estate is like flying blindfolded. If you want to avoid unwanted surprises, make sure you take time to set up proper bookkeeping. Make no mistake: having transparent records keeps you sailing in the business.