Deposits are typically refundable. The focus of this article are refundable deposits. Non-refundable deposits do exist, but they will be explained in another article.

A refundable deposit is a deposit that a tenant typically gets back after a specific period of time. The end of a specific period of time is typically the end of a lease. 

The most common refundable deposits include:

  • Security Deposits
  • Pet Deposits
  • Storage Deposits
  • Key Deposits
  • Last month's rent

Note: Regular security deposit records in accounting can be created automatically when you create a lease. If you need to create an entry of a refundable deposit to your books follow the instructions below:

To record a refundable deposit: 

  1. Go to ‘Accounting’ Tab and click onto  ‘Add’ dropdown and select add ‘Deposit’. 
  2. Charge Tenant or Owner by selecting the Payer
  3. Select the Property 
  4. Optional the Lease Agreement related to the deposit
  5. Select the liability account you want to Credit
  6. Amount of Deposit

Once a deposit has been recorded as a charge you can mark it as ‘paid’ once payment has been received.

Your General Ledger will show your liability charge once paid.

You need to refund a refundable deposit? Click here

NOTE: 

  • Refundable deposits is always a liability account. If you need to add another liability account for a specific refundable deposit, go to Chart of Accounts.
  • If you receive a payment from a tenant that you have to return, record it as a liability. 
  • If a payment is for a compensation like rent or late fees, record it as income.
  • Some areas have specific laws regarding the handling of deposits. If this is the case for you, please consult your accountant to ensure compliance.

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