Security deposits

A deposit is held, not earned#

A tenant's security deposit is still theirs when you receive it: you hold it, and owe it back unless the lease lets you keep some. So it's never income when it comes in. In the books it's a liability, Security deposits held, until you refund it, keep it or apply it to rent.

Each lease keeps its own record of its deposit. Deposits lists what's held, by property and tenant, with the total.

Recording a deposit#

1. On Deposits, click Record Deposit.
2. Pick the Lease, and under What happened, what it was (below).
3. Enter the Amount and Date, and for money that moved, the account it was Deposited to or Paid from. Add a Note if you like.
4. Click Record.

What happened is one of four:

• Received: the tenant paid the deposit into your account. It's held for them, not income.
• Refunded: you paid some or all of it back, from your account.
• Kept: you kept some or all of it for damage or cleaning, as the lease allows. It becomes rent on the property (Schedule E line 3). The repair itself is its own expense on the property, recorded as any other.
• Applied to rent: put toward rent the tenant owed, usually the last month's. It becomes rent on the lease and pays that month on the Rent Roll.

Kept and applied move no money: it was already in your account. They only change what's held into rent, on the day you record them.

The balance can't go below zero#

A lease's deposit holds what was received, less everything refunded, kept or applied. Nothing can be refunded, kept or applied that wasn't received: the dialog shows what the deposit holds, and EscBooks won't record more than that.

• A deposit paid in two parts is two Received entries. A tenant who leaves with damage might have one Kept and one Refunded, adding up to what was held.
• A lease with a deposit recorded can't be deleted. When the tenant leaves, set Moved out on the lease instead, and record what happened to the deposit.
• The rent a kept or applied deposit made follows it: change or remove the deposit entry, not the rent.

Deposits on a bank statement#

When you review a bank statement, pick Security deposit received… under Properties in What is this? for a tenant's deposit, then their lease, and click Mark as Deposit. A payment back to them is Security deposit refunded… and Mark as Refund. The entry is recorded with the line, so it isn't counted twice. See Reviewing statements.

Deposits in your reports#

• In the General Ledger, a deposit received is credited to Security deposits held, a liability, and debited to the account it went into. A refund reverses it. Kept or applied, it moves from Security deposits held to Rental income.
• Received and refunded deposits never count in the profit and loss or on Schedule E. Kept and applied deposits count as rent the day they're recorded.
• Properties shows each property's deposits held beside its rent and loans. See Rental properties.