Adding Depreciable Property

TedStryker

Hello!
New Quicken Home & Business user here. I used legacy versions of Quicken (for personal stuff) for several years, then went away for a while. Now I'm back.

I'm making some capital expenditures on a rental property this month. Some of it will be Safe Harbor eligible, some it won't be. Sooooo the question is: how can I record depreciable property in Quicken H&B? There doesn't appear to be a way to do that.

I thought about creating a separate asset account linked to the property, and just transferring the capex amount to it. But there doesn't seem to be a way to do that either.

What am I missing? Surely, software that advertises "property management features" has capex tracking tools....

GeoffG

You can record any type of depreciation by adding a transaction for whatever amount you deem appropriate and using the account as the category. So the category would be the account name in [xx]. You can also create a reminder to perform rolling depreciation at a set interval.

TedStryker

> @GeoffG said:
> You can record any type of depreciation by adding a transaction for whatever amount you deem appropriate and using the account as the category. So the category would be the account name in [xx]. You can also create a reminder to perform rolling depreciation at a set interval.

Sure, but what's the best way to record the purchase of depreciable property? Roll the cost into the property's asset account?

Quicken_Tyka

Hello @TedStryker

Thank you for the response and the additional details. If you have not done so already I would recommend reviewing a previous discussion on the topic at the link below.

https://community.quicken.com/discussion/7872252/how-do-i-depreciate-real-property

You may also consider creating a feature request if you find that what you are needing is unavailable.

I hope this helps!

-Quicken Tyka

TedStryker

Hello @Quicken_Tyka !

I do appreciate the information. That thread didn't really answer my question. I may take the time to submit a feature request; however I find it difficult to believe this hasn't already been requested by nearly everybody else using H&B to manage properties. It's a fairly basic necessity for investment properties.

That said, it is conceivable that the product team decided to keep fix asset tracking contained within the Quickbooks / TurboTax wheelhouse, as it's likely outside of the scope of the average Quicken user.

Quicken Anja

Hello @TedStryker,

Thank you for reaching out to the Community to tell us about your issue, though I apologize that you are experiencing this.

I attempted to search around and see if there was already an existing Idea thread for this topic that I could refer you to but, unfortunately, was not able find one. So, as previously suggested by Quicken_Tyka, I do also recommend that you create an idea post and add your vote.

Our Development and Product teams frequently use our idea posts in order to improve Quicken and implement new features requested by customers. This way other users who have the same or a similar request can vote on your idea.

TedStryker

Many thanks for the reply. I will do so.

Wuhrman

Hello TedStryker. I keep track of depreciable business properties in Quicken. My method is not terribly classy -- I simply create an asset account for the asset, and then a separate accumulated depreciation account (a NEGATIVE asset account) for the accumulated depreciation -- but it gets the job done. And each year, as I take depreciation expense, I increase the accumulated depreciation account to the NEGATIVE with an entry reading "2020 (or whatever year) Depreciation Expense," and then categorize the entry as Depreciation Expense (not to be confused with the Accumulated Depreciation ACCOUNT you're making the entry in) in the category field.

There may be some more sophisticated way to do this in the software, but one of my passions about Quicken is that it's NOT complicated. I HATE Quickbooks for being overly complicated and have been doing many clients' books on Quicken for years for that very reason.

Hope that helps.

NotACPA

My method is even simpler.  In that Asset account, I create a self-referencing transaction (that is, a transaction where the Category is the asset account itself, enclosed in Square brackets (e.g., [House]) and then input a value into the Decrease column.

BUT Note, that I only input depreciation once a year, and I only care what the current value of the asset is ... not the accumulated depreciation.

TedStryker

@Wuhrman Thank you for the reply. I've considered doing it like this. I think one of the problems with this is that there is no way to flag transaction as non-cash in Quicken. (Is there?) Thus, cash flow information would need to be adjusted for non-cash items.

I'm discovering that Quicken H&B has some nice property management features, but isn't particularly savvy with the financial aspects of property management. (And maybe that's because the majority of users leave it up to their accountant??) For that, I suppose one must enter the Quickbooks realm.

TedStryker

@NotACPA Interesting. I believe this actually solves the cash-flow report problem since you're posting the depreciation charge directly to equity.

Ok, I think I'm getting closer to the way it can be done. Let's use an example:

Let's say I need to replace an air conditioning condenser for a specific property. Since the component cost is above the Safe Harbor de minimus limit, it must be capitalized and depreciated. I could create an asset account for the equipment (can do in H&B). Ideally I'd like to tie it to the specific property so it shows up in the account list under the property (can't do in H&B that I'm aware of). Then I could create a contra account for the accumulated depreciation (can do). Ideally this contra account would be tied to the asset account for the purpose of a basis report (can't do). Periodic depreciation charges would be in the contra account (negative balance) and charged against equity. (Ideally they should be charged to a non-cash depreciation category - can't do in H&B that I'm aware of.) The negative account balance is accumulated depreciation.

So, it's a little sloppy and far from ideal, but we have a way to do it. It would work for my mom-and-pop operation. But for scaling up, it would be best to bite the bullet for a bona fide property management suite.

To an extent, these problems would be easier to manage if one used a different Quicken file for each property. But then you couldn't get aggregated financial reports.

NotACPA

Since your issue  has all sorts of tax ramifications, I'm going to bow out of this discussion.

I only deal in cash basis accounting.

Sorry that I couldn't help more.

YingDave

@TedStryker said:

...Ideally I'd like to tie it to the specific property so it shows up in the account list under the property (can't do in H&B that I'm aware of). Then I could create a contra account for the accumulated depreciation (can do)....

You may be able to achieve what you need with an alternative approach using Tags. I have a Tag created for each property - which is the short name. The description for each tag has the full address of the property. Any report that I run I can subtotal by property (tag) or only select a specific property (tag) to report on. I actually use one single asset account for property called "Rental Property" every transaction I book against a category AND a property (tag). Tags can be used for many things and act like a second dimension to reporting ag. each car in a "Vehicles" asset account.

This is regardless of the Property functions and therefore can be used as you said to "tie depreciation account to the asset account". Using Tags can tie data together data from any account, anywhere in the whole of the Quicken file.

kolbeman

Any of you guys figure out which Quicken tax category to use for depreciation? I can't find a Schedule E - line 18 depreciation expense option when creating a new "depreciation" expense category.

jujujuju

kolbeman: Quicken is really deficient in their list of tax categories,and you cannot add more yourself. I don't use Quicken Tax Schedule reports - I just run regular reports and pull the tax info off of them.

jujujuju

TedStryker: "Since the component cost is above the Safe Harbor de minimus limit, it must be capitalized and depreciated." This is false. A Safe Harbor is just that - a safe harbor. It does not mean that anything above the Safe Harbor limit MUST be capitalized and depreciated. Follow the law.

jujujuju

As to the original question:

I have one account for the property basis, a second account for property accumulated depreciation, a third account for leasehold improvements and their depreciation. That third account could be made into two accounts, one for leasehold improvements and the other for leasehold improvements accumulated depreciation, I just didn't set it up that way when I set out.