I have recorded Security deposits under same category as income. But, when they move out, I’m only refunding partial deposit because they have utility expenses to reimburse that I have to take out. I can record their refund against Security Deposits category, but how do I handle the balance that needs to be applied to another category (pass through expense)?
@homesbylw We would recommend using the “Security Deposits” category to track security deposits received (Money In) and refunded (Money Out).
To the extent security deposit funds are applied to tenant balances, just imagine that you are handing the deposit back to the tenant and then the tenant is handing the same funds back to you as rent, utilities, reimbursement for repairs, etc. In this scenario, you still record a Money Out transaction to Security Deposits and then also a Money In transaction to “Income > Rents” or whatever sub-category is most appropriate. Hope that helps!
Please also confirm these steps with your CPA since we do not give official tax advice.