How to Account for Mortgage Payments in Baselane: Two Proven Methods for Landlords

Baselane makes it easy for landlords to track mortgage payments—whether you split each monthly transaction into principal, interest, taxes, and insurance, or reconcile everything at year-end.

Managing rental property finances comes with plenty of moving parts—rent collection, expense tracking, and perhaps the trickiest of all: mortgage payments. If you’re using Baselane bookkeeping software to manage your real estate portfolio, you have two primary ways to record mortgage payments.

Both methods are accepted, but they come with different pros and cons depending on whether you value real-time accuracy or time savings during the year. In this article, we’ll walk through the two approaches step by step, explain when each makes sense, and give you tips on choosing the right one for your bookkeeping style.

Why Mortgage Payment Accounting Matters for Landlords

Before we dive into the two approaches, let’s cover why this decision is important. A monthly mortgage payment typically covers more than just paying down your loan balance. It often includes:

• Principal – reduces your loan balance (not an expense, but equity).

• Interest – deductible expense reported on Schedule E.

• Taxes (Escrowed Property Taxes) – deductible when paid.

• Insurance (Escrowed Homeowner’s Insurance or PMI) – deductible as a rental expense.

The challenge is that your lender usually takes one lump-sum payment each month. If you record that entire payment under “Mortgage,” your books won’t reflect how much was interest (deductible) vs. principal (not deductible).

That’s where Baselane bookkeeping gives you flexibility: you can either split every payment into components or wait until year-end to reconcile using your Form 1098 mortgage statement.

Method 1: Splitting Each Monthly Mortgage Payment

This is the most accurate approach and the one that gives you the clearest financial picture throughout the year. Here’s how it works in Baselane:

1. Record your monthly mortgage payment when it clears your bank.

2. Use the transaction split feature to categorize each component into:

   • Principal (loan balance adjustment, not deductible)

   • Interest (Schedule E expense)

   • Property Taxes (Schedule E expense)

   • Insurance (Schedule E expense)

3. Save the transaction, and Baselane automatically updates your reports and dashboards.

Advantages of Splitting Monthly

• Real-time financial clarity – You’ll always know how much of your payment is reducing debt versus hitting expenses.

• Accurate cash flow reporting – Baselane’s analytics and dashboards will reflect your true operating costs.

• Smooth tax prep – By year-end, most of the work is already done; your accountant simply pulls reports.

Disadvantages

• Time-intensive – You’ll need to split every mortgage payment, which can add up if you own multiple properties.

• Requires lender detail – You must know the exact breakdown (usually available on your mortgage statement or online portal).

Best for: Landlords with multiple properties, growing portfolios, or anyone who relies on monthly financial reports for decision-making.

Method 2: Reconciling at Year-End With Manual Adjustments

The second approach is simpler during the year but requires adjustments at tax time. Instead of splitting every payment, you:

1. Record the entire monthly mortgage payment as “Mortgage” in Baselane.

2. At year-end, when you receive Form 1098 from your lender, create manual adjusting transactions for:

   • Total interest paid (deductible)

   • Property taxes paid (deductible if escrowed and remitted)

   • Insurance paid (deductible if escrowed and remitted)

   • Principal (loan balance adjustment)

Advantages of Year-End Reconciliation

• Faster month-to-month bookkeeping – Just one category, no splits needed.

• Simple for single-property landlords – You won’t waste time on details that don’t affect your monthly decisions.

• Relies on official documents – The Form 1098 ensures accuracy when adjusting.

Disadvantages

• Less accurate financial reports during the year – Cash flow dashboards in Baselane won’t distinguish between expenses and principal until you adjust.

• Year-end workload – More manual clean-up is required, which can be stressful if you wait until tax season.

Best for: Landlords with one or two properties who primarily care about year-end tax reporting rather than monthly cash flow tracking.

Side-by-Side Comparison: Splitting vs. Reconciling

Compare the two common approaches to recording mortgage payments in Baselane. On mobile, this table becomes easy-to-scan cards.

Side-by-side comparison of Baselane mortgage accounting methods

Feature	Split Monthly Payments	Year-End Reconciliation
What it is	Break each monthly payment into principal, interest, property taxes, and insurance using Baselane’s split transaction feature.	Record one monthly “Mortgage” payment during the year, then make manual adjusting entries at year-end from Form 1098 (interest) and your escrow totals (taxes/insurance) plus principal to loan balance.
Accuracy	High — real-time clarity every month.	Deferred — low during the year, accurate after adjustments.
Time commitment	Ongoing monthly splitting; moderate effort.	Very low during the year; higher at tax time.
Tax prep	Mostly done already; clean Schedule E export.	Requires manual year-end entries from 1098/escrow statements.
Best for	Multi-property investors, partners, and growth-focused landlords who want monthly performance visibility.	One or two properties, owners prioritizing simplicity and only caring about year-end results.
Pros	Accurate monthly cash-flow and expense categorization Cleaner analytics and lender/partner reporting Smoother audits and tax filings	Fast monthly bookkeeping Leverages official 1098 figures Minimal effort until tax season
Cons	Takes longer each month Needs exact lender breakdown More clicks across multiple loans	Dashboards less accurate during the year Larger year-end workload Risk of procrastination or missed entries
Baselane steps	Import/confirm the bank transaction Use Split to allocate principal, interest, taxes, insurance Save and review reports	Categorize each payment as “Mortgage” during the year At year-end, enter interest, taxes, insurance as expenses Record principal as a loan balance adjustment
Consistency tip	Use the same categories and naming across all properties Recommended	Document your year-end workflow and repeat it annually

Tip: Pick one method and apply it consistently across properties for cleaner books and faster reporting.

Which Method Should You Choose?

Ultimately, the choice comes down to how hands-on you want to be with your Baselane bookkeeping.

• If you want accurate, real-time insights into cash flow and property performance, splitting each payment is worth the effort.

• If you want to keep things simple and only care about taxes once a year, year-end reconciliation is perfectly fine.

At Vestora, we generally recommend splitting for landlords with multiple properties or partners—it keeps reporting consistent, especially when scaling. But for smaller landlords, year-end adjustments can be more than enough.

Final Thoughts

When it comes to accounting for mortgage payments in Baselane, there’s no one-size-fits-all approach. The key is to stay consistent. Pick a method and use it across your properties so your bookkeeping doesn’t get messy.

Baselane’s flexibility makes it easy to do both. Whether you prefer detailed monthly tracking or a streamlined year-end reconciliation, the platform adapts to your style—helping you stay tax-ready and financially organized.