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How to move a Security Deposit to Rental Income?

Spotteddog

A tenant moves out. I keep the Security Deposit to use for fixing damage.

I would think that would be transferring the Security Deposit into Rental Income?
I would then just enter all my repairs normally.

How do I do this? I just can't seem to get it to work.

Thanks

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Hogeye

The first question is what did you do with it when you received it?

Enter the tenant's move out date and the amount that was returned to the tenant ($0). That will reduce the amount in your Security Deposit Liability Account.  Keep in mind the Security Deposit Liability Account is for tracking purposes only and you should not enter transacitions in it.
If you already deposited the security depost in your bank when you got it you can change the category to Security Deposit Forfeit.  This has a Schedule E Rent received tax line assignment.  So in the end it is all Rent received as far as Schedule E is concerned.  Enter your expenses normally.

Spotteddog

Hogeye,

Thanks for the help. That makes sense and I will try that this evening to see if I understand you correctly.

Since you appear to be one of the most knowledgeable people in this community, I'd like to run something by you to get your opinion. I'll try to make it brief.
I've had a sole proprietor business and several rental properties for 30 years. And for 30 years I have always written my own spread sheets to do all my business and rental accounting. It would take a few hours per month and had been working out fine for me.
I have been using Quicken Premium for several years just for my investments and my checking accounts. I never incorporated my business account into it.

Due to recent law changes, my tax man insists that I start using a commercial account app to handle these new laws. He strongly suggested QuickBooks. I chose Quicken RPM.

I can see that once everything is setup, Quicken might be easy to maintain. My problem has been re-setting up Quicken RPM with my older Quicken check books. I am have trouble changing the categories in a lot of older, already entered, check book entries. I have been working on this for several hours the last week and have just scratched the surface.

With all this in mind, is there a better way to go about all this conversion? At this point I am getting s frustrated. Just when I think I have everything right, some unforeseen transaction pops up somewhere where it shouldn't be and I'm stuck again.

My other comment, and this is a deal breaker:
I have emailed Quicken support several times with short, very specific questions. These questions are usually about some very specific problem pertaining to a category, tag, or account. They are not general questions. Support has never, ever answered my question. True, they send back an answer, but it is pages of trouble shooting guides for "corrupt" files or something similar to that. These answers have absolutely no relationship to my question.
Is this typical?
Quicken (any software) is useless without competent support. Support like I have been getting for week 1 has been just useless.

Unless I can fix all of these conversion problems asap, there is no use to continue with Quicken. Maybe I should just move on to Quickbooks at this point and ask for a refund for Quicken. I just don't know.

PS. I do go to the community first. I can find 90% of my answers there, but sometimes I really can't find answers my specific problem.

Thanks.

Spott

Hogeye

Spotteddog, I converted from MSMoney about a year ago and had much to learn and convert.  After using Quicken a short time I realized much of my setup had been incorrect and went about fixing it.  I found the Find and Replace feature invaluable to correcting categories, payees, and tags in batches.  You can find by any field then replace any field with what you want.   Be sure to backup before doing anything.  Much of mine was trial and error and I had to restore more times than I would like to admit.

My needs are simple.  I have 6 units that I invoice and track with my main goal being an accurate Schedule E report at the end of the year.  Your needs may be more complex.  Many users in this community are very experienced with complex business and rental situations and use Quicken successfully.  I can't anwer whether Quickbooks would better manage your situation but I do know that you would likely need to get everything converted and set up in Quickbooks anyway.

As far as Quicken support goes, I am just a user like yourself.  The one time I had to contact them, I used the Live Chat and received prompt help with a live person.  My experience was favorable.

Quicken has a 60 day satisfaction guarantee if you decide it's not for you.

Spotteddog

I'm back.

I must be all screwed up.
I tried what you said about the security deposit.
I made the move out date 2/4/2011 and amount returned $0.00. That did not reduce my amount in the Security Deposit Liability Account.
And I can't go back and change the category for the deposit of the security deposit, because my check book register doesn't go back that far in Quicken.

To me the only way to fix this would be to go into the Security Deposit Liability Account and manually transfer that money to another account, but I don't think I can do that. Can I?

Hogeye

According to Quicken help you do not want to make a transaction from your security deposit liablility account. Go back to the tenant and change the returned amount from 0 to the full amount. If you can't go back to the original deposit transaction then you can't change the category.

Howard Roark

From irs.gov:

"Do not include a security deposit in your income when you receive it if you plan to return it to your tenant at the end of the lease. But if you keep part or all of the security deposit during any year because your tenant does not live up to the terms of the lease, include the amount you keep in your income in that year.

If an amount called a security deposit is to be used as a final payment of rent, it is advance rent. Include it in your income when you receive it."

http://www.irs.gov/businesses/small/industries/article/0,,id=98895,00.html

Spotteddog

NoWayJose,

Thanks for jumping in. I'm just about ready to ask for a refund for Quicken RPM. It's just unnecessarily complicated and does not give me the reports I need to give to my tax preparer.

I understand what you are saying 100%. I've been doing this for 30 years, but manually with spread sheets. I understand that the security deposit has to be claimed as income, if I don't return it. Or, if I keep it to apply to damage done by the tenant.

The problem is that Quicken doesn't know this.
After hours and hours of trying, I can not get Quicken to "keep" the security deposit (If I enter return "0" security deposit and enter a date, it will not register anything). Also, it will not add the kept security deposit to rent received. It also will not reduce the amount in my security deposit liability account, unless I "give it back", the whole amount.

If there's a way to do this, please clue me in. Really, I have been working on this one problem for 6 hours today. Really!

Thanks.

Hogeye

Maybe this link will help.
https://qlc.intuit.com/post/show_post_full_view/chEo0GroOr37z5acfAralO?ppid=99259632

or this
https://qlc.intuit.com/post/show_full/aptZfU0Aqr36mWacfAYHXM

Spotteddog

Hogeye,

Thanks. That's a really big help.
But, actually, everything I have read in the community say NEVER change anything in the "security deposit liability account". But experience and common sense says that the only way to fix this is to edit the liability account.
I'll start tackling that tomorrow.

Thanks again.

Hogeye

I agree. I think you were on the right track to begin with.

Spotteddog

Hogeye,

Thanks for this link: https://qlc.intuit.com/post/show_full/bjuUuwp7ur4kPPacfAralO/how-to-move-a-security-deposit-to-rental-income#

I followed those instructions (slightly modified) and it worked.

I "gave back" the security deposit in the rent center, which reduced the liability account to the correct amount.

Went into the security deposit liability account and changed to category to "Forfeited Security Deposit", which I assign as "unspecified income" on Sch E.

I also added the tag for the tenant and it correctly added the "kept security deposit" as "rent" to the correct tenant and added it to February's rental income.

It did NOT add another transaction to my checking account, which is correct. It shouldn't because it was already deposited years ago.

The one thing it did do though was put the "late payment" icon on that rent. I guess that is meaningless as far as changing anything other than being informative for me? I hope.

I guess the bottom line would be that there is SO much in Quicken that is not "automatic" and it takes a lot of manual "dirty fixes" to get the correct results. I still might ask for a refund and go back to my Excel. I was hoping for easier with Quicken, not more difficult. I'll give it another week or so.

Hogeye

Thanks for the feedback, Spotteddog. We both learned something from all of this.
The late payment notice might have something to do with the move out date. Check that. It should be vacant.

unknown

That just solved my problem in RPM 2016 version of quicken.... kept the security deposit for the last months rent-- and this was perfect!