How to handle personal transactions in a rental account
Have you ever mistakenly grabbed the wrong card and bought something for yourself with your dedicated rental credit card? Or maybe you haven't yet completed the transition to fully separating personal and business expenses and so routinely sift through imported transactions full of personal and rental expenses. Either way, being familiar with the different ways to handle personal transactions is helpful if they come across the import feed of your rental business bank and credit card accounts.
There are three main ways to handle personal transactions in the Import Feed of your operating accounts. Each option impacts your records differently in REI Hub and is appropriate for a different scenario. The different ways to handle these transactions are:
1) Book it as an Owner Distribution
Funds coming out of your rental operating account and moving to your personal accounts or paying your personal expenses are considered Owner Distributions. After selecting Owner Distribution as the transaction type, select Owner Funds as the Equity Account. Owner Funds represent your personal funds not currently being tracked in REI Hub.
Owner Distributions (or Contributions) are not taxable events - your taxable income is the same whether or not all funds have stayed in your business accounts or moved to personal accounts. Owner Distributions reduce the balance of the Owner Funds account on the Balance Sheet.
If you want to reconcile your rental business accounts, you should handle personal transactions this way. Every single transaction must be booked in some fashion to reconcile an account. Using the below options (Ignore, Delete) for personal transactions in a business account will throw off your balances in a reconciliation.
On the other hand, if the account in question is NOT mostly used for business, or you will never attempt to reconcile it, booking all personal transactions as Owner Distributions may not be worth the extra clicks. The Ignore or Delete options may be a better fit in that scenario.
NB for credit card accounts: Credit card accounts do not include 'Owner Distribution' as a default transaction type, as credit cards are not typically used for traditional distributions. You can still book a personal transaction as a distribution by selecting 'Transfer Between Accounts' and then selecting 'Owner Funds' as the transferred to account.
2) Ignore the Imported Transaction
Ignored transactions are still shown on the Import Feed. The Book button turns into an Unignore button, allowing you the option to return the transaction to Unbooked status if you ever need to.
Since the Ignore option lets you continue to see the imported record in the Import Feed and to Unignore if needed, it is a great option for retaining visibility into all account activity. If you realize in the future that one of your Ignored transactions was actually a rental property expense, it is easy to make the change.
3) Delete the Imported Transaction
Clicking the red trash can lets you completely delete the imported record. Like Ignoring, no Booked Transaction will be created, and the deleted transaction will not impact your REI Hub rental property financials in any way.
Unlike Ignoring, when you delete an Imported Transaction, it is gone forever. You will no longer see it in the Import Feed and cannot recover it in the REI Hub system. So, if you're positive it is a personal expense, you definitely don't want to see it anywhere in REI Hub, and you know you'll never reconcile that account; delete away! But if you're unsure about any of those, Ignoring is the safest option.
If you later realize that a Deleted transaction was actually a rental property expense, the easiest thing would be to add that transaction to the system manually.
4) Contact us with any questions!
