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L
landlord-too
July 5, 2022
Question

How can I apply a tenant’s security deposit to a repair?

  • July 5, 2022
  • 2 replies
  • 0 views
I have a security deposit in the chart of accounts and I created an invoice for my tenant to have visibility on the repairs I need to make which are taken out of the security deposit. 
How can I use the security deposit towards paying the invoice?
Thank you

2 replies

P
Pete_Mc
July 5, 2022

Are you sure you want to use the Security?  I'd strongly recommend you do not do this if the Tenant has not moved out.  Typically the Security Deposit is for when the tenant moves out and you determine if there are damages that you can no longer recoup from them.  If you use  the Security now, what are you going to use if there are more damages discovered when they leave?

 

If they damaged the property and it is not "normal use" where you need to actually pay for it, then I would Invoice them for the repairs.  You can either require payment in full or you could increase their rent by X amount to recoup the expense over time.  Pending what your laws are there regarding changing the rent, you may need to have a them sign an agreement acknowledging the increase is due to their damages.

 

If for some reason you really want to use the Security, then I'm assuming you have that Security Deposit in a Liability Account.  You would then just apply the Expenses for the repairs to that Liability Acct.  I'd then send them a Statement of their new Security Deposit Balance.  (But then what are you going to do if there are more damages after they move out???)

L
landlord-tooAuthor
July 5, 2022

Thank you. 
The tenant already moved out, I am recouping most of the repair expenses through the use of the security deposit. 

you make it sound easy to “just apply” the expense to the security deposit account. Through a journal entry?

 

I need to keep track of the invoice I sent the tenant and would like to link the security deposit (in a liability account) to the payment of that invoice. 

thanks 

 

S
ShiellaGraceA
July 5, 2022

Thanks for getting back to us, @landlord-too.

 

I'll share some information about the tenant's security deposit. As mentioned by our Allstar @Pete_Mc, you can create an expense transaction and use the security deposit account to keep track of the deposit balance. Let me guide you through the steps.

 

  1. Go to +New.
  2. Select Expense.
  3. Under Category details, choose the security deposit account. Then, enter other expense details.
  4. Click Save and close. See the attached image below.

 

 

For more information about billable expense, check out this guide. This article will also apply to QuickBooks Online US version: Enter billable expenses.

 

The billable expense feature will help you keep track of your customer's expenses and invoices. 

 

Additionally, you can use journal entry to record the expense.

 

Please let me know if you have follow-up questions or concerns with security deposits. I'll be around for you. Take care and have a good one.

R
Raeka8
February 18, 2023

I have similar issue. Rather than apply it to security deposit, I invoiced her for the damage to our property. (It wasn't in her apt. but damage caused to something by her car). She wrote a check for the estimate to replace the item. I wasn't sure the proper way to set this up in Chart of Accounts. Should it be an account receivable or an expense item?

The way I stumbled into doing it was invoicing her $32 and then applying the payment she gave me to that invoice. In checking my Chart of Accounts, I see that it is an Account Receivable type of account. I can delete and change it to an expense account if that is right way. But in the meantime, I'm doing my taxes now and my TurboTax balance sheet is off by that exact amount of the damage: $32. I have more assets than liabilities. How do I make this work? I'll follow that procedure for future damages that I don't take out of Security Deposits.

Thanks in Advance

Rachel

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