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Join nowHI, I have a question about a transaction. I want to try playing it down with an example.
Mr. Green is a friend of mine, He lives out of the U. S . A.
He wanted to do some investments in the U. S. So I, as a good friend tried to help him out and offered him to manage the property he wants to buy.
Mr. Green wired into my account $20,000 for the deposit for the property. However the deposit was $22,000, so i paid it out of my pocket.
Now Mr. Green owes me $2,000.00
However, I'm going to collect the rent for the property as well as paying the bills and at the end of the year we are going to sit down and make the calculations as to how much money i owe him.
So now to my question,
How do i record the $20,000 that he wired me and i gave it for the deposit, an how do i record the extra $2,000 i paid.
The rent and expenses i receive and pay are all categorized by class so i can run a report to see what i paid and received. However i can't figure out how to record the deposit and extra money i paid.
If anybody could help me i would greatly appreciate!
Thanks!
Solved! Go to Solution.
It is going to depend on how you plan on reporting the rental income. If you are treating it as income to you and then an expense paid out you will have Rent post to an income account, but this becomes more complicated. As just a property manager you would have the Rent item post to the DTO liability account. Then rent is treated as someone else's money and all you do is collect and transmit. This reduces your paperwork as the owner is then responsible for any rental income statement for tax purposes. YOu would not , yourself, have to have your own Schedule E or Form 8825, just Schedule C.
You are acting as a broker or go-between here and hopefully all of your state real estate laws are being followers as far as acting as an agent and the purchase of the property happens in accordance with those.
The property does not go on your books but the money for it passes through. Same with rent, minus expenses. Set up a Current Liability account in Quickbooks to track money you owe the owner. You could add a current asset account for what he owes you but keep it simple to start. When you receive the $20k that is recorded to the Due To Owner liability account. When you write the check for $22k you record it all against the DTO account resulting in a negative liability of $2k. (or just record the $2000 check if you never had hands on the $20k)
Now when you collect rent it all goes to DTO, eventually going positive. This will represent money on hand that you need to pay out. You will bill ordinary expenses as well as property management fees to the owner so that you can deduct these bills from the DTO account (you may need a Cash Clearing bank type account to essentially "deposit" paper payments of invoicing while entering a negative line item to the DTO account resulting in a zero dollar deposit)
At some point you will transmit an agreed upon amount to the owner and that will post from DTO.
I truly appreciate your response! I think i'm clear now as what to do.
Again. I greatly appreciate your response! have a wonderful day
One More Question,
I'm doing invoices for rent,
How do i record the rent part to the liability account?
It is going to depend on how you plan on reporting the rental income. If you are treating it as income to you and then an expense paid out you will have Rent post to an income account, but this becomes more complicated. As just a property manager you would have the Rent item post to the DTO liability account. Then rent is treated as someone else's money and all you do is collect and transmit. This reduces your paperwork as the owner is then responsible for any rental income statement for tax purposes. YOu would not , yourself, have to have your own Schedule E or Form 8825, just Schedule C.
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