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Treatment of a returnable security deposit on an apartment I'm renting: Quicken for Mac 2017

QuickPeterQuickPeter Member ✭✭
I'd like to know the correct way to treat a security deposit I've just paid to a property agent in respect of an apartment I'm renting.
When I terminate the rental agreement I expect to get the deposit back, I'll be leaving the property in good order!
I believe I need somehow to create a "creditor account" in my Quicken for Mac 2017 so as to accurately reflect my "Net Worth" figure.

I'd really like to know what others think the treatment should be.

Peter  (QuickPeter) in England

Comments

  • Unknown Member
    edited June 2018
    My solution is when you pay the deposit it goes into the payment column & you categorize it (example Rent Paid:Deposit).  When you get the money back it goes into the deposit column using the same category & they zero each other out.  I realize that in this scenario it doesn't reflect the fact that you consider the deposit money part of your net worth but..... you don't currently have that money so I would argue it is not currently part of your net worth.  That said, I am not an accountant & struggle with Quicken Daily :-)!
  • John_in_NCJohn_in_NC SuperUser ✭✭✭✭✭
    edited June 2018
    I wouldn't overcomplicate this. If it were I, I would simply create an Asset account. And in your (likely checking account) make a split transaction: one line for the first month rent, and another for the amount of the security, with that line being a transfer transaction over to the freshly created asset account. Obviously, how you pay this and the split lines may vary.

    When your lease is up, you can simply transfer the cash back to the source account.

    Doing this will keep your net worth correct, but your cash and credit accounts will be correct for present balances as reported by your bank.
  • QuickPeterQuickPeter Member ✭✭
    edited October 2018
    Susan, I understand exactly what you say and you've offered a good working solution for me.

    I'm trying to reflect that the deposit I've paid to the agent makes them a creditor, to me.
    They owe me that money, right?  Therefore, it should score as part of my net worth I believe.

    Let's see what the others have to say.

    Peter
  • AlanAlan Member ✭✭
    edited October 2018
    I'd keep it as simple as possible. I'd handle it as Susan suggests although I would just categorize it as rent rather than create a new category. This makes your rent look larger than it really is the year you move in and smaller than it really is the year you move out, but does it really matter in your financial planning and budgeting.
    I would not treat it as an asset for a couple of reasons. First, unless your net worth is very small, how you treat the security deposit will not significantly affect your net worth. Second, even though you expect to get your deposit back, I'd be conservative and assume the worse. Who knows? You might have a dishonest landlord.
    I hope these suggestions are of interest. Since you don't have to follow any legal record keeping requirement, what you do is a matter of taste. There is no single 'correct' way to treat the deposit.
  • Unknown Member
    edited June 2018
    Alan said:

    I'd keep it as simple as possible. I'd handle it as Susan suggests although I would just categorize it as rent rather than create a new category. This makes your rent look larger than it really is the year you move in and smaller than it really is the year you move out, but does it really matter in your financial planning and budgeting.
    I would not treat it as an asset for a couple of reasons. First, unless your net worth is very small, how you treat the security deposit will not significantly affect your net worth. Second, even though you expect to get your deposit back, I'd be conservative and assume the worse. Who knows? You might have a dishonest landlord.
    I hope these suggestions are of interest. Since you don't have to follow any legal record keeping requirement, what you do is a matter of taste. There is no single 'correct' way to treat the deposit.

    Good points, Alan.  Also along the lines I was thinking. "It isn't yours until it is" - LOL And we'll hope Peter has an honest landlord & that Peter doesn't accidentally cause any major damage!
  • QuickPeterQuickPeter Member ✭✭
    edited June 2018
    Alan said:

    I'd keep it as simple as possible. I'd handle it as Susan suggests although I would just categorize it as rent rather than create a new category. This makes your rent look larger than it really is the year you move in and smaller than it really is the year you move out, but does it really matter in your financial planning and budgeting.
    I would not treat it as an asset for a couple of reasons. First, unless your net worth is very small, how you treat the security deposit will not significantly affect your net worth. Second, even though you expect to get your deposit back, I'd be conservative and assume the worse. Who knows? You might have a dishonest landlord.
    I hope these suggestions are of interest. Since you don't have to follow any legal record keeping requirement, what you do is a matter of taste. There is no single 'correct' way to treat the deposit.

    John in NC, thanks for your thoughts and they reflect my ideas on how to deal with it i.e. create an asset account.

    Peter
  • QuickPeterQuickPeter Member ✭✭
    edited June 2018
    Alan said:

    I'd keep it as simple as possible. I'd handle it as Susan suggests although I would just categorize it as rent rather than create a new category. This makes your rent look larger than it really is the year you move in and smaller than it really is the year you move out, but does it really matter in your financial planning and budgeting.
    I would not treat it as an asset for a couple of reasons. First, unless your net worth is very small, how you treat the security deposit will not significantly affect your net worth. Second, even though you expect to get your deposit back, I'd be conservative and assume the worse. Who knows? You might have a dishonest landlord.
    I hope these suggestions are of interest. Since you don't have to follow any legal record keeping requirement, what you do is a matter of taste. There is no single 'correct' way to treat the deposit.

    Alan, I've had some really useful feedback on this as you can see, including your views just now.
    I particularly like your "  ...even though you expect to get your deposit back, I'd be conservative and assume the worse."
    That's prudent and a good point, you must be a CPA, right?  :-)

    Peter
  • AlanAlan Member ✭✭
    edited June 2018
    Alan said:

    I'd keep it as simple as possible. I'd handle it as Susan suggests although I would just categorize it as rent rather than create a new category. This makes your rent look larger than it really is the year you move in and smaller than it really is the year you move out, but does it really matter in your financial planning and budgeting.
    I would not treat it as an asset for a couple of reasons. First, unless your net worth is very small, how you treat the security deposit will not significantly affect your net worth. Second, even though you expect to get your deposit back, I'd be conservative and assume the worse. Who knows? You might have a dishonest landlord.
    I hope these suggestions are of interest. Since you don't have to follow any legal record keeping requirement, what you do is a matter of taste. There is no single 'correct' way to treat the deposit.

    No, I'm not a CPA. I'm an economist, but I taught in business schools for 30 years and was surrounded by accountants.
  • QuickPeterQuickPeter Member ✭✭
    edited June 2018
    Alan said:

    I'd keep it as simple as possible. I'd handle it as Susan suggests although I would just categorize it as rent rather than create a new category. This makes your rent look larger than it really is the year you move in and smaller than it really is the year you move out, but does it really matter in your financial planning and budgeting.
    I would not treat it as an asset for a couple of reasons. First, unless your net worth is very small, how you treat the security deposit will not significantly affect your net worth. Second, even though you expect to get your deposit back, I'd be conservative and assume the worse. Who knows? You might have a dishonest landlord.
    I hope these suggestions are of interest. Since you don't have to follow any legal record keeping requirement, what you do is a matter of taste. There is no single 'correct' way to treat the deposit.

    Alan, thanks for sharing that with us.
    I hope we have more of these type of exchanges in the future.

    Best wishes,   Peter
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