Glossary · DealProp
Owner draw
Money the property owner takes out of the rental business for personal use. Distinct from a salary, distinct from a distribution, and treated differently for tax purposes.
An owner draw is money the property owner takes out of the rental business — usually moved from a property operating account into a personal account — for personal use. For a sole proprietor or single-member LLC, it is not a salary and not a tax-deductible expense; it is the owner pulling out their own equity, and the business does not report it as a payroll item.
For a multi-member LLC or partnership, the equivalent is a distribution and the rules differ slightly. For an S-corp, the owner needs to be paid a reasonable salary first; any additional withdrawal is a distribution.
Why it matters
Owner draws confuse a lot of first-time landlords because they look like an expense — money leaving the bank account — but they are not. They do not reduce taxable income. They do not appear on Schedule E. They are a movement of equity, not a cost of running the business.
The practical consequence: if you treat draws as expenses, you understate your taxable income, which feels good until the audit finds it. If you fail to track draws at all, you cannot tell at year-end how much money you actually pulled out of the business, which makes your personal cash management harder than it needs to be.
The right approach is to track draws separately from operating expenses, from CapEx, and from owner contributions (the reverse — money you put into the business from personal). At year-end, draws net against contributions to give you the change in owner equity for the year. Your CPA needs this number.
In DealProp
DealProp tracks owner draws as a distinct movement type, separate from expense categories. Each draw posts to a draws account and shows up on its own line in the year-end summary. Your CPA gets the number they need; you keep the bookkeeping clean. See books & reports.