Rogers Park holds more small residential landlords than most parts of the city. Two-flats, three-flats and small courtyard buildings, often owned by people who never planned to run a business and now run one. Rental bookkeeping has its own rules, and the same few mistakes come up on almost every new file.
Repair or improvement
Repairs come off in the year they happen. Improvements are capitalized and depreciated over decades. A roof replacement is an improvement. Patching a leak is a repair. The line turns on whether the work restores the building or betters it, and getting the split wrong is the error we correct most often on Schedule E.
Living in your own building
Owner-occupied buildings add a second split. Live in one unit of three and every shared cost divides between a personal expense and a rental one, with only the rented share depreciated. Owners who miss this either lose deductions they were owed or claim ones they were not, and both get expensive at sale. Mortgage interest and property tax on your own unit move to the personal side.
Nonprofits and campus businesses
The neighborhood carries a heavy nonprofit and community organization presence, along with the businesses clustered around Loyola. Nonprofits file Form 990 rather than a business return, track restricted and unrestricted funds separately, and lose exempt status after three consecutive missed filings. We keep the calendar.
Student-facing retail and food businesses near the campus run on a year emptying out in summer. Bookkeeping flagging the seasonal swing early gives an owner time to plan around it.
Questions owners ask
I live in one unit and rent the other two. How does it work?
The building splits by use. Rental income and directly rented costs go on Schedule E, shared costs are apportioned, and only the rented share depreciates.
When do I start making estimated payments on rental income?
Once withholding elsewhere stops covering what you owe. For a landlord with a job, one property is often absorbed by payroll withholding and the second one is not. We work the number out rather than waiting for a penalty to answer.
Do you prepare returns for nonprofits?
Yes, along with the bookkeeping underneath. The filing is straightforward when funds were tracked correctly during the year, and painful when they were not.