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Rental Property expense entries

Forum|Forum|8 years ago
August 15, 2017
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Hello all,

I am having a huge headache in trying to input expenses for rental properties that I am tracking in Quickbooks. I have had people suggest using negative entries to account for the expenses when using the make deposits functions. I have also had suggestions on making a sales receipt and then using negative entries to back out expenses that way. Neither of them will allow me to do what is stumping me on the following scenario:

I have a property manager who manages the properties in question. So that means that every month I get a statement with all the income (rent, late charges etc) and correspondingly the expenses (management fees, mortgages that were paid by Prop. Manager on my behalf, repairs, etc). Easy so far.... However, I have started a new company file beginning in January of this year (to simplify my previous books, or so I thought) and I have had a unit that was vacated by a tenant, and therefore needed make ready repairs.

So herein lies my question and what is stumping me:

How am I supposed to enter all the repairs for this unit for the time frame (two months) that the property was vacant, and therefore no income for that individual property came in? This is your typical repairs, cleaning expenses, management fees etc. I have tried doing this on the make deposits feature (but as I found out, you can't make a negative deposit) I have tried doing this on the sales receipt function (and once again, you aren't allowed to make a negative overall sales receipt). So, what am I missing? Can someone please help me out?

Best answer by john-pero

Even though you may not receive 100% of the collected rent due to fact property manager is spending it on expenses for you you still must record 100% of the collected rentt as income. Since you are not depositing it all into your real bank account I suggest a clearing bank account. The clearing account is not real but can handle the transactions you need.

1. Record all rent through invoice or sales receipt. You can set up recurring invoices to even post early so you can give tenants a monthly statement prior to when rent is due.

2. Deposit all rent into clearing account. Move the actual net received from clearing to real bank account.

3. Record expenses paid by manager as coming from clearing account. The goal, unless pm keeps a reserve is to monthly get the clearing balance to zero.

In the world of rentals and tracking in QuickBooks you set up each property as a Customer. Each building is (in online) a customer of a customer (Jobs in desktop) and each unit and then tennat in turn a customer of a customer of a customer. You can nest 5 levels deep. I also utilize Class Tracking since the reports of P&L by class give me more of what I need (in preparing columns on Schedule E) than P&L by Customer or Job

FinfrockTax

@oni9dave wrote:
Hello all,
I am having a huge headache in trying to input expenses for rental properties that I am tracking in Quickbooks. I have had people suggest using negative entries to account for the expenses when using the make deposits functions. I have also had suggestions on making a sales receipt and then using negative entries to back out expenses that way. Neither of them will allow me to do what is stumping me on the following scenario:

I have a property manager who manages the properties in question. So that means that every month I get a statement with all the income (rent, late charges etc) and correspondingly the expenses (management fees, mortgages that were paid by Prop. Manager on my behalf, repairs, etc). Easy so far.... However, I have started a new company file beginning in January of this year (to simplify my previous books, or so I thought) and I have had a unit that was vacated by a tenant, and therefore needed make ready repairs.

So herein lies my question and what is stumping me:

How am I supposed to enter all the repairs for this unit for the time frame (two months) that the property was vacant, and therefore no income for that individual property came in? This is your typical repairs, cleaning expenses, management fees etc. I have tried doing this on the make deposits feature (but as I found out, you can't make a negative deposit) I have tried doing this on the sales receipt function (and once again, you aren't allowed to make a negative overall sales receipt). So, what am I missing? Can someone please help me out?

Rental expenses should be recorded as expenses and are not dependent upon whether you have rental income. Rental income is recorded as revenue and is not dependent on whether you have expenses. These are two separate types of entries. Revenue is recorded by creating an invoice, sales order, or making a deposit. Expenses are recorded by entering bills, writing checks, or entering cc charges.

If you are trying to track your expenses for a particular property against the revenue received for that property, you could use the Class function in QB. Each property would be a different Class, which would allow you to run reports and see your P&L by property while still keeping the same account numbers for your expense types and revenue.

C

cjd303

I am in process of setting up Company file for client that files (5) SCH E with his 1040. He owns 5 Properties. I set up each as separate location instead of Customer. When I post a deposit (manually) not on bank download yet, I enter the location from the drop down list. I will do the same for Expenses. when I choose P&L report by location will that give me what I need OR should I change all the Locations to CLASS instead. I want to make this simple and easy to run reports for the CPA/Tax Accountant I did a transaction of deposit and expense, just to see the resulting report. I don't want to "overdo" anything

M

Malcolm Ziman

@cjd303 wrote:

I am in process of setting up Company file for client that files (5) SCH E with his 1040. He owns 5 Properties. I set up each as separate location instead of Customer. When I post a deposit (manually) not on bank download yet, I enter the location from the drop down list. I will do the same for Expenses. when I choose P&L report by location will that give me what I need OR should I change all the Locations to CLASS instead. I want to make this simple and easy to run reports for the CPA/Tax Accountant I did a transaction of deposit and expense, just to see the resulting report. I don't want to "overdo" anything

It's better to use Class because you can split one Expense into different Classes on each line. Eg. You paid one payment to a plumber who billed for work done at 2 properties. You can't enter a different Location on each line.

The problem with entering income using a Deposit is that it does not show on the customer's ledger page, or sales reports. It shows only on the P&L. You should use an Invoice and then Receive Payment to accrue the income or just a Sales Receipt to record the income on the same date as the deposit

john-peroAnswer

Even though you may not receive 100% of the collected rent due to fact property manager is spending it on expenses for you you still must record 100% of the collected rentt as income. Since you are not depositing it all into your real bank account I suggest a clearing bank account. The clearing account is not real but can handle the transactions you need.

1. Record all rent through invoice or sales receipt. You can set up recurring invoices to even post early so you can give tenants a monthly statement prior to when rent is due.

2. Deposit all rent into clearing account. Move the actual net received from clearing to real bank account.

3. Record expenses paid by manager as coming from clearing account. The goal, unless pm keeps a reserve is to monthly get the clearing balance to zero.

In the world of rentals and tracking in QuickBooks you set up each property as a Customer. Each building is (in online) a customer of a customer (Jobs in desktop) and each unit and then tennat in turn a customer of a customer of a customer. You can nest 5 levels deep. I also utilize Class Tracking since the reports of P&L by class give me more of what I need (in preparing columns on Schedule E) than P&L by Customer or Job

C

cjd303

thank you for the steps you use to record income and expenses for multiple Properties. I have a question: Can I just eliminate the step of creating customer invoices. Tenants pay the same every month. I have set up Properties and record the income and expenses to each property. I do this manually as the bank account is not set up for download yet. The transactions are recorded through the Bank Register. I can still get the P&L for each property. I appreciate you opinion on this

Cathy

BizPro

BizPro is here to help. Are you working in QuickBooks Online or Desktop? This should be any easy fix. We specialize in property management, vacation rental management and accounting for both. Having been a property manager, primarily in Commercial and Multifamily since 2003...we've seen it all. I freelance now, assisting investors and managers, consulting and managing their accounting. Feel free to message me back or tomorrow you can give me a call. I'd be happy to ask a few questions, answer yours and try to walk you thought it and get you back on track. This b.s. about negative entries will be in the past. The trick I've always used is I create a Job/Project (depending on if you're in QB Desktop or QBO) under the property you are tracking, and Job Cost the expenses for the vacancy, just like if it were a another tenant. I like to name those by the vacancy date. This way all of your costs are in one place If they are billable back to the last tenant, we can set it up to track that too. I get help here when I need it....Happy when I can help. Get in touch tomorrow, and I'll see if I can take away that headache! :-) Regards, Michelle Hunnewell, BizPro (located in the Pacific Time Zone, with an EST phone number) [removed by moderator] [removed]) email: [email address removed]

M

michelroy

How would you track large repair transactions, if it is all for the same property? What account would you use for this tracking?

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