Owner Insights
A good rental property year end checklist does two jobs at once. It closes out 2026 cleanly, so your CPA gets organized books, your landlord tax deductions are backed by receipts and your 1099s go out on time. It also sets up 2027, when Washington’s rent cap, Seattle’s notice rules and a new budget all shape what your property earns.
This guide is written for Seattle-area owners, from a single condo to a multifamily building. It walks through finances and taxes, local compliance, the property itself, residents and leases, and the 2027 plan, with the key dates from November 2026 to April 2027 in one place. It is general information, not tax advice, so use it to prepare for a conversation with your CPA, not to replace one.
The short version
A complete year-end checklist covers five areas: closing the books and preparing for taxes, renewing local registrations and licenses, inspecting the property before winter, reviewing leases and resident records, and building next year's budget and rent plan. Working through them in November and December leaves January free for 1099s and your CPA.
Most owners do the tax part and skip the rest, but the pieces depend on each other. Your rent plan depends on Seattle’s notice rules, and your tax return depends on records that are easiest to rebuild while the year is fresh. Use the checklist below as your working list.
Year-end checklist for Washington rental owners
0 of 19 done
Finances and taxes
Compliance
Property
Residents and leases
Plan 2027
If that list feels long for one property, it grows quickly with several. Owners who want to compare doing it themselves with handing it off can start with our Seattle property management guide for rental owners.
Start with your bank statements, not your memory. Match every rent deposit to a unit and month, and every withdrawal to a receipt or invoice. If personal and rental money share one account, separate them now.
A few income rules trip up owners every year. IRS Publication 527 says advance rent counts as income in the year you receive it, no matter which period it covers, so January 2027 rent paid in December 2026 belongs on your 2026 return. Security deposits work differently: you don’t include a deposit in income when you receive it if you plan to return it. If you keep part of a deposit because a tenant broke the lease terms, the amount you keep is income in that year.
Prepaid insurance needs care too. If a premium covers more than one year, Publication 527 says you deduct only the part that applies to each year of coverage.
Pro tip: build a one-page summary
For each property, list rent collected, deposits held and expenses by category on one page, with the backup behind it. You will spot missing receipts in December rather than in April.
The common landlord tax deductions in IRS Publication 527 include advertising, cleaning and maintenance, commissions, insurance, legal and professional fees, management fees, mortgage interest, repairs, property taxes, utilities you pay, and depreciation. Improvements are not deducted all at once. They are capitalized and recovered through depreciation over several years.
The line that matters most is the one between a repair and an improvement. Publication 527 says an expense is an improvement if it results in a betterment to the property, restores it, or adapts it to a new or different use. Betterments include fixing a pre-existing defect, enlarging the property, or increasing its capacity, strength or quality. Ordinary repairs that keep the property in good working condition can generally be deducted in the year you pay them.
The building itself is depreciated using the straight line method over 27.5 years, with a mid-month convention. Personal property used in the rental, such as a dishwasher, is depreciated over a shorter period, and land is not depreciated at all.
| Usually deducted in the year paid | Usually capitalized and depreciated |
|---|---|
| Repairing a damaged section of gutter or a few shingles | A new roof |
| Servicing a furnace and replacing filters | A new heating system, furnace, central air or duct work |
| Patching and repainting walls between residents | New flooring or wall-to-wall carpeting |
| Fixing a sticking window or a broken latch | Storm windows and doors |
| Advertising, cleaning, insurance for the year, management fees | Kitchen modernization and built-in appliances |
| Mortgage interest, property taxes, utilities you pay, legal and professional fees | Additions such as a deck, bathroom or garage, and grounds work such as a fence, driveway or landscaping |
Two IRS safe harbors can move some costs into the left column. The de minimis safe harbor lets owners without an audited financial statement deduct amounts up to $2,500 per invoice or item, if they elect it with a statement attached to a timely filed return. The safe harbor for small taxpayers covers owners with average annual gross receipts of $10 million or less and buildings with an unadjusted basis of $1 million or less, as long as the year’s repairs and improvements on that building stay under the lesser of $10,000 or 2 percent of that basis.
One federal change matters if you bought items for a rental recently. The IRS says the 100 percent special depreciation allowance, often called bonus depreciation, is restored for qualified property acquired and placed in service after January 19, 2025. Qualified property generally has a recovery period of 20 years or less, such as appliances, not the 27.5-year building. The same law, the One Big Beautiful Bill Act, also made the qualified business income deduction permanent. Ask your CPA whether either applies to you.
Keep improvement records for as long as you own the property
The IRS says records tied to property should be kept until the period of limitations expires for the year you sell it. Invoices for a 2026 roof could matter decades from now, so scan them and store them with the property file.
If your rental activity is a trade or business, you generally file Form 1099-NEC for each unincorporated contractor you paid $2,000 or more in 2026. That threshold rose from $600 for payments made after December 31, 2025. Form 1099-NEC is due to recipients and the IRS by January 31, which moves to February 1, 2027.
The new $2,000 threshold comes from the IRS instructions for Forms 1099-MISC and 1099-NEC (revised December 2026). It applies to contractor payments and to rents.
You usually do not need a 1099 for a corporation. Lawyers are the exception: report attorneys’ fees of $2,000 or more even when the firm is a corporation.
January 31, 2027 is a Sunday, so Form 1099-NEC is due Monday, February 1, 2027. Form 1099-MISC goes to recipients the same day and to the IRS by March 31 if you file electronically. Schedule E asks whether you made payments that needed a 1099, so keep your vendor list handy.
If a property manager collects rent for you, the manager reports the rent paid to you on Form 1099-MISC. Check it against your own records when it arrives.
Do this before the holidays
Washington does not currently have an individual income tax, according to the Department of Revenue, so your rental profit is taxed federally. A new 9.9 percent tax on income over $1 million begins January 1, 2028, so it does not touch your 2026 or 2027 returns. Washington’s capital gains tax also exempts the sale of real estate.
The Department of Revenue says renting or leasing real estate is not subject to business and occupation (B&O) tax or retail sales tax, though stays under 30 days are treated differently. Seattle’s Director’s Rule 5-530 likewise exempts amounts derived from the rental of real estate from the city’s business license tax.
Exempt income is not the same as no paperwork. Seattle says anyone doing business in the city must hold a business license tax certificate, renewed by December 31, but it does not spell out every landlord situation. If you are unsure, ask the city’s license office at (206) 684-8484 or tax@seattle.gov.
Seattle and King County dates to check
RRIO also requires you to post your registration certificate in a common area or give a copy to each tenant, and to complete an inspection requirement at least once every 5 to 10 years. If your renewal comes up in early 2027, put it on the calendar now.
For Seattle-area owners
Pacific Crest Real Estate manages more than 4,800 residential and multifamily units across Seattle, the Eastside, Snohomish County and the wider Puget Sound region, with monthly and annual reporting built in.
Vacancy rarely shows up as a line on a statement, which is why owners underestimate it. A unit empty for a month costs a full month of rent, plus utilities, cleaning and marketing. The calculator below uses a simple daily rate: monthly rent times 12, divided by 365.
What vacancy cost you this year
Enter your monthly rent, the days a unit sat empty in 2026 and how many units were affected.
This estimates lost rent only. Utilities, turnover cleaning, repairs and advertising during the vacancy add to the true cost, so treat the result as a floor.
As a worked example, a $2,400 unit that sat empty for 30 days lost about $2,367 in rent. If the number surprises you, our guide on how to reduce tenant turnover in Seattle covers the habits that keep good residents renewing.
Plan them now, because the notice window is long. The Washington Department of Commerce set the maximum annual rent increase at 10 percent for January 1 through December 31, 2027, up from 9.683 percent for 2026. Under RCW 59.18.700, rent can’t be raised at all during the first 12 months of a tenancy.
State law requires at least 90 days’ written notice of a rent increase. Seattle requires more: the City says owners must give tenants written notice 180 days before raising periodic or monthly housing costs. The City’s own example: for a June 1 increase, the tenant must receive notice by December 2, which allows a full 180 days not counting the day of service. Notice must be delivered in person or both posted and mailed first class. In Seattle, an increase of 10 percent or more within 12 months also triggers the Economic Displacement Relocation Assistance (EDRA) notice requirements.
A late notice usually means a later increase
If you plan a spring or early summer 2027 increase in Seattle, the 180-day clock is already running. Count the days from the date the resident actually receives the notice, use the City’s required format and language, and keep proof of how you served it.
Our full Seattle rent increase rules guide for owners covers exemptions, the EDRA threshold and how to serve notices correctly. For year-end purposes, the practical step is a renewal calendar: list each lease end date, the increase you are considering, and the last day to serve notice, then review it each month.
A useful rental property budget starts from your 2026 actuals, not from rent alone. Take each expense category from your year-end summary, adjust it for what you already know about 2027, and add separate lines for vacancy, capital projects and reserves. The tabs below group the lines most owners need.
Start with scheduled rent for each unit, including any increases you plan to notice under the rules above.
These recur every year and are usually deductible when paid.
Keep these separate so a roof or boiler does not distort your operating picture.
Insurance deserves a real review rather than an automatic renewal. Compare the new premium to this year’s, check that dwelling coverage reflects current rebuilding costs, and ask what the policy covers for water damage, wind and loss of rent.
There is no single right reserve amount. Base yours on the age of your roof, heating system, water heaters and appliances, then compare budget to actual every month so drift shows up early.
An annual walk-through in late fall catches the problems that winter rain turns into claims. Look at roofs, gutters, downspouts and drainage, check under sinks and around water heaters for slow leaks, and confirm that every smoke and carbon monoxide alarm works. Write down what you see and take dated photos: they become next year’s baseline.
Security deposit records belong in the same review. Under RCW 59.18.270, deposits must go into a trust account at a financial institution or licensed escrow agent located in Washington, and tenants must get a written receipt and the name and address of the depository. When someone moves out, RCW 59.18.280 gives you 30 days to send a full and specific statement of any deductions, with copies of estimates or invoices that support the damage charges.
Finally, check each lease file for a signed lease, renewals, the move-in condition report and the deposit receipt. Gaps are easier to fix in a quiet month than in a dispute. Pacific Crest Real Estate’s inspection and maintenance program uses documented move-in and move-out inspections for this reason.
Here is the season in one view. Where a date falls on a weekend, the dates below already reflect the next-business-day rule.
November 2, 2026
Second-half King County property tax due
Moved from October 31, a Saturday.
November to December 2026
Serve Seattle notices for spring and summer 2027 increases
The City's example: a June 1 increase needs notice received by December 2.
December 31, 2026
Tax year ends and Seattle business licenses expire
Last day to pay expenses you want on your 2026 return, and to renew a Seattle business license.
January 1, 2027
Washington's 10 percent rent cap takes effect
Applies to increases taking effect during 2027.
January 15, 2027
Fourth-quarter federal estimated tax payment
For owners who pay estimated tax.
February 1, 2027
Forms 1099-NEC to contractors and the IRS
January 31 is a Sunday. 1099-MISC copies go to recipients the same day.
Mid-February 2027
King County mails 2027 property tax statements
Put the actual amount into your 2027 budget.
March 31, 2027
Electronic filing deadline for Form 1099-MISC
Paper filing is due earlier, on March 1.
April 15, 2027
Federal individual return due for calendar-year filers
An extension gives more time to file, not to pay.
April 30, 2027
First-half 2027 King County property tax due
A late first half makes the full year delinquent.
Put these dates into a calendar with a reminder two weeks ahead of each. Owners deciding whether the workload is still worth carrying alone may find our guide on when to hire a property manager in Seattle helpful.
The most common deductions listed in IRS Publication 527 are mortgage interest, property taxes, insurance, repairs, cleaning and maintenance, utilities you pay, advertising, management fees, legal and professional fees, and depreciation. Improvements such as a new roof or flooring are not deducted in one year. They are capitalized and depreciated, though the de minimis safe harbor can cover items up to $2,500 per invoice.
Not in the usual sense, because Washington does not currently have an individual income tax. Your rental deductions are claimed on your federal return through Schedule E. Long-term residential rent is also generally exempt from state B&O tax and from Seattle's business license tax. A new state tax on income over $1 million begins in 2028 and does not affect 2026 returns.
Usually yes, if your rental is a trade or business, the contractor is not a corporation, and you paid them $2,000 or more during 2026. That threshold rose from $600 this year. Form 1099-NEC is due to the contractor and the IRS by February 1, 2027, because January 31 falls on a Sunday. Ask your CPA if you are unsure.
Generally yes, if it is a true repair and you paid it in 2026, it belongs on your 2026 return. The key question is whether it was a repair or an improvement. Fixing a leak or repainting usually counts as a repair, while replacing the roof or heating system is an improvement that is depreciated over time. Keep the invoice and a photo.
Seattle requires 180 days' written notice before raising rent or other periodic housing costs, which is longer than the state's 90 days. The increase also can't exceed Washington's 10 percent cap for 2027, and in Seattle an increase of 10 percent or more triggers relocation assistance notice rules. For a June 1, 2027 increase, the resident must receive notice by December 2, 2026.
Keep most tax records for at least three years after you file, which is the standard IRS period of limitations. Keep purchase and improvement records much longer: the IRS says records tied to property should be kept until the limitations period expires for the year you sell it. Those records support depreciation and your gain or loss on sale.
Start 2027 with a clear plan for your rental
Pacific Crest Real Estate handles leasing, rent collection, maintenance and inspections, financial reporting and compliance for Seattle-area owners. Tell us about your property and we will prepare a management proposal.
Sources
Verified as of October 2026. This is general information, not tax, legal or financial advice. Tax rules, thresholds, fees and deadlines change, and how they apply depends on your situation, so confirm the details with a CPA or tax professional and with the linked official sources before you act.
