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Level 1

Rental Income/Expense how to record in QB

I use a Property Management Company to manage my rental. I receive the rent LESS expenses incurred for the month. I entered invoices for the full rent due each month, then allocated invoice payments  to undeposited funds,I then used Make Deposits to show that rent less expenses, which I entered as negative amount  I entered the expenses per unit/class in the Make Deposits window. So the amount deposited is the full rent due less expenses paid But when I run P/L report, Income shown is gross rent due but not received

How can I correct this as my Income per P/L is of course much higher than the money I banked for the year

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Best answer December 10, 2018

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Level 2

Rental Income/Expense how to record in QB

Your rent income should be your gross rent.  Then you subtract the expenses you incurred (which are taken out by your agent) to give you your Net Income.  If you are handling all transactions like this, your Net Income (not Gross income) is equal to the money you banked for the year.

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Level 2

Rental Income/Expense how to record in QB

Your rent income should be your gross rent.  Then you subtract the expenses you incurred (which are taken out by your agent) to give you your Net Income.  If you are handling all transactions like this, your Net Income (not Gross income) is equal to the money you banked for the year.

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Level 1

Rental Income/Expense how to record in QB

What about the other way around. I am the property manager, I collect $X in rent, take my % and send net rent amount to owner. I don't want the amount sent to the owner to count as expenses as it would skew my income vs expenses incorrectly as it is not really income received. THoughts?
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Community Champion

Rental Income/Expense how to record in QB

Deposit rents collected into a liability account such as Due To Owner (that is what one PM software that syncs with quickbooks calls it) Enter a Sales Receipt and charge to an asset account called Due From Owner. Write check to owner posting the entire rent collected from the Due To, and a negative from Due From and the check will be the net and you will not have shown income or expense

Example: in January you collect $2500 in rent. Deposit it in your trust bank account for property management. In the deposit detail you post $2500 to Due To Owner. If % is 10 you create a sales receipt for your property managemnet income account for $250 and it goes to Due From Owner.  Then you write a check for $2250 and the detail lines are Due To Owner $2500
Due From Owner -$250
Net $2250

If you are tracking each property and tenant in quickbooks then you need to set up the tenants as customers and you can even set up recurring monthly invoices to post rent received against.
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Level 1

Rental Income/Expense how to record in QB

When I follow the instructions in the above "Example:" for the "Due to Owner" account I first made it an income account (because I thought that made more sense) and then changed it to an asset account (as in the directions) and in both scenarios the sales receipt posts to the Due to Owner account as a decrease. Is this correct? When I write the check to the owner with the deposit detail containing the Due From Owner amount as a negative, it also appears as a decrease in the Due From Owner account. Is this also correct? It doesn't seem like the above two scenarios should both be correct. Am I wrong? Additionally, when I received the rent payment, I deposited it into our bank account. When I enter a sales receipt for the management fee it asks me where to deposit it, my bank account, or undeposited funds. The thing is, this management fee is supposed to come from the rent that was paid and already deposited, so it's like depositing twice. What am I missing? Thanks in advance!
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Community Champion

Rental Income/Expense how to record in QB

Due To Owner should be a Liability account since it is what you as management owe the owners. That is why as an asset the transaction posts negative.  As long as you understand that a negative asset equals a positive liability you will be fine (unless you wish to change it to liability)

Due From Owner is an asset, accounts receivable and can represent not only management fees owed but also reimbursement for charges you paid ahead and need to collect from owner - Say you paid inspection fees or eviction filing from your account. These are not your expenses but are increases in Due From Owner.

Lets break it down.  You collect and deposit into your trust account $1000 in rent and have a 10% management fee.
You can collect the $1000 and post to rent income and reduce it later. Or you can split the deposit into $900 Due To Owner and $100 to Property Management Income.  Increased liability and increased income = deposit to bank.

But on your invoices to tenants you do not want the owner transactions to show at all so you still collect full rent as invoiced and then make the "movement" of funds later.  This can be one of the rare cases when a journal entry works better than a bill or receipt >>
Journal Entry
debit Rent Income $1000
credit PM Income $100
credit Due to Owner $900

Then write check $900 against Due to Owner.

OR skip the above, and write check for $900 as follows
Rent Income (as an expense) $1000
PM Income negative $100

This will perform the same end result but you may give up the interval tracking of what goes on, especially if you hold any money in reserve or do not pay owner in full each month.
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Level 1

Rental Income/Expense how to record in QB

Thank you!  That was helpful.  Another question - I do create invoices for tenants but I don't send them these invoices.  I just do that to keep track for my own records and to be able to send the owner reports.  The invoice that really needs to be sent out is the one to the owner that shows income earned less repairs & maintenance less management fee, for each month.  But I can't figure out how to do the above recommended scenarios and include the management fee in the invoice because I need this fee to show up as income to my company and an expense to their property.  Additionally at the end of the tax year I want to send the owner a report with the total income and expenses for the property (that includes management fees).  I enter all the repairs and maintenance and other expenses that my company pays for as billable expenses labeled to the specific property (job)  which then permits me to add these to the invoice.  If I put the management fee directly in the invoice so it posts as income to my company, I can't (or so it seems) assign it to a job so that when I pull a report for that job the charge will know to show up as an expense for the property.
Thanks again!!
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Level 1

Rental Income/Expense how to record in QB

Hi John! This was really helpful, thanks! 

An additional question I hope you can help with. 

How would I go about recording expenses I paid on the owner behalf that will be deducted from the amount I send to him? I know it would go in the Due From Owner account but what account would that offset? I paid these expenses through my personal credit card before my LLC business checking was established. Should I also set up a liability account as a Due to/from (my name) for the reimbursement to myself for those expenses? This way I keep everything separate and not record them as my expenses? In addition, would I record these expenses through a JE or set up a vendor account for my CC? I hope that makes sense!  

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Moderator

Rental Income/Expense how to record in QB

Thank you for joining into this thread, @Jess15161!

 

You can create a journal entry so you can record your business expenses paid with your personal funds. But I'd still recommend contacting your accountant for further guidance in choosing the account specifications.

 

Nevertheless, here's how you can create your journal entry:

  1. Go to Accountant.
  2. Select Make General Journal Entries.
  3. Choose your Expense account and the Owners Equity account.
  4. Under DEBIT, enter the amount you've paid for your expense account.
  5. From the CREDIT column, enter the amount you've paid for your Owners Equity account.
  6. Click Save & Close.

From there, you can write a check for the reimbursable amount. Let me show you how:

  1. Go to Banking.
  2. Select Write Checks.
  3. Choose your bank account.
  4. Under PAY TO THE ORDER OF, select a payee.
  5. From the Expenses tab, select your Owners Equity account.
  6. Enter the reimbursable amount.
  7. Click Save & Close.

As always, you can visit our Help Articles for QuickBooks Desktop if in case you need to learn some "How do I" steps.

 

It'll be always my pleasure to help if you have any other questions. I'll be keeping an eye for your response.

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Level 3

Rental Income/Expense how to record in QB

The quickest solution I can think of is to Job Cost your expenses to each property or tenant/Unit. Your P&L should come out orrectly running a P&L by JOb (or Project) depending on if you're working in QBooks desktop or QBooks Online. Hope this is helpful. If you need more guidance, feel free to ask.
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Level 1

Rental Income/Expense how to record in QB

Sorry if this is a stupid question - but how do I actually do this within quickbooks?

My import of lines from my bank is my net income, not sure how to reflect that in quickbooks as the gross figure?

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Level 1

Rental Income/Expense how to record in QB

Where do I go to post the property manager's fee.  At one time, the CPA said to go to 'Company,' but I don't know what to do from there.

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Level 1

Rental Income/Expense how to record in QB

I am a little late to the game on this, but I too am a rental property owner that uses a property management company.  I understand how to input the rents and expenses from this Q&A thread.  The question I have is which QuickBooks plan do you use?  Do you use self-employed, simple start, or another plan?  It seems pretty basic, so I am assuming it is not one of the pricier plans.  Thanks.

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QuickBooks Team

Rental Income/Expense how to record in QB

Hello, @Alex Alanis.

 

Choosing the best QuickBooks version depends on what features you really need.

 

With that being said, it would be best if you can see the plans and pricing of each version where you can see the discounts of the prices  and evaluate further on what version can best cater to your needs,

 

You can tap on us if you have additional questions or you need additional help. Have a great day.

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Level 3

Rental Income/Expense how to record in QB

Hi there,

 

This is what we do every day and will be happy to help.

 

We use QBO PLUS for all clients except a couple of management companies who have many, many properties, trust accounting etc and have to use Advanced. This will not be necessary for you.

 

A few questions:

Do you hire and pay any contractors yourself or, are all contractors and expenses paid by your management company? If you pay any contractors directly you'll need to issue 1099-Misc. forms each January so will require a version that will allow you to track those costs, by vendor and category so you can Map the 1099's to the appropriate box(s) (Usually Box 7). and you will also be able to file your 1096 report to the IRS where you report all of your 1099's that are issued.

In addition, even for other expenses, you will be able to track expenses by Unit and pull P&L by Property, by Category, by Vendor, etc. These figures are very helpful, help make tax filing easier.

 

For you as the investor, with a management company, we recommend setting up each mortgage you pay, so you can easily track your costs and as you reduce your liability each month as you make your payments.

These will also be expensed to each property accordingly and will appear on your balance sheet.

We also make sure that the management fee is accounted for in your QuickBooks account.

\

Using the bank feeds save so much time each month.

 

Going through an accountant or bookkeeper, you can sometimes get a substantial discount on the monthly fees. (We pass savings along to our clients, even with minimal monthly services)

The way we set up books for real estate investors you can also track expenses you have when a property is vacant on turn overs for rental and improvement. In addition, all your rents can be tracked easily by unit and by which tenant is current.  Some property managers provide excellent financials (which you can use as your guide) each month, some do not. In any case it's easy enough with QuickBooks Online to do your own basic tracking and always know where you stand. You'll see which properties are the best producers of income and which are financially costly, which all help you full access to profitability data.

 

All of this tracking and more will also be very important when you would like to refinance, purchase or sell your properties.

 

We are also available directly for a few bits of advice or how to make something work in QBO at no charge.

 

We also offer consulting and monthly compliance services.

 

Feel free to call upon us any time.

 

Best regards and continued success,

 

Michelle Hunnewell

BizPro Financial

[email address removed]

484.424.9776

 

 

We would be happy to give you a few pointeer

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Level 1

Rental Income/Expense how to record in QB

I am trying to figure this one out as well.  I have a situation where a client has given a mgmt company an initial deposit to open the trust account.  I am not sure how to best record that as months of rent and expenses went in to it and they just gave the client a huge check.  I am having to back track six months and record the activity per property and the net income.  Any suggestions on what account to use, thinking balance sheet asset account, and then record the expenses and such.  

 

Additionally, not sure how to record the CAM charges if I don't have the breakdown to fund the payable account.  Thinking I will just expense it per location as well but open to ideas.  I am just not as familiar with the property mgmt statements that I am getting.  

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