How do I record a Property Insurance Claim?

gregmeech · ‎December 10, 2018

I received an insurance payment for a roof claim on two of my rental properties. Should I deposit the check in the same EXPENSE category listed below. Or do I need to make an income category for Insurance Claims? Does it matter. I have 2 roofs. One I am going to repair and the other I am not.

EXPENSE
Insurance:
Property Insurance:

Thank you in advance for taking the time to help me.

Rustler · ‎December 10, 2018

@ greg

I would book the insurance payment as income, split between both properties, and I would create an insurance income account for that purpose

Repairs to a roof do not impact on the fixed asset at all, a roof replacement does and is a new fixed asset account

if you repair a roof, then that is an expense for that property obviously

View solution in original post

Rustler · ‎December 10, 2018

@ greg

I would book the insurance payment as income, split between both properties, and I would create an insurance income account for that purpose

Repairs to a roof do not impact on the fixed asset at all, a roof replacement does and is a new fixed asset account

if you repair a roof, then that is an expense for that property obviously

gregmeech · ‎December 10, 2018

That sounds like the best method. Thanks for your response.

Rustler · ‎December 10, 2018

You're Welcome

Corae · ‎December 10, 2018

You need to ask your tax professional about this.

gregmeech · ‎December 10, 2018

Why? Keeping my accounting books are for more than just taxes. I use them for Managerial Accounting the most, Financial Accounting occasionally, and tax accounting once per year. What my accountant does with it, I'm not concerned. Thank You for your response but it wasn't very helpful.

Corae · ‎December 10, 2018

This is a tax question and whatever you want to achieve, bottom line is that the tax treatment of your insurance payment will overrule whatever else you are trying to track. You are looking at fixed assets and repairs, and whatever your accountant will decide is appropriate for each one of your roofs goes where tax law will dictate. This is then how you will need to enter it in QB.

gregmeech · ‎December 10, 2018

I disagree. Every question in business is a tax question, sure. But for Bookkeeping what is the best method of maintain accounts. My CPA will file my taxes correctly whether I add it to my expense category with a negative or add it to my income category as a positive.

Corae · ‎December 10, 2018

Comment deleted.

Sibyl · ‎March 02, 2019

Corae is correct, but if you chose to pay your CPA to fix all of your (possible) errors, that's up to you

ClaireSitz · ‎November 11, 2019

I agree, as well. If you do not use the proper accounting per your tax accountant than you will be showing it as an income. You need to discuss with them how to categorize the income so that you are not showing a tax liability.

Landlord1 · ‎January 06, 2020

I am wrestling with this question myself. Actually, insurance proceeds are not income. I haven't received the bills for my repair work yet, so if I account for it as income, it will drive up my profits and my taxes for this year and alternatively effect a loss for next year when my bills come in. It should go to a balance sheet account until it can be matched up with the repair expenses.

Candice C · ‎January 06, 2020

Congrats on making your first post here in the Community, @Landlord1.

Let's get some insight into where you should deposit the insurance payment.

For you to get the best solution to this issue, I recommend reaching out to your accountant so that they can show you how it needs to be recorded based on your business.

Remember, I'm only a click away if you have any other questions. Have a great evening.

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How do I record a Property Insurance Claim?