About Fixed Assets
Fixed Assets (also known as Capital Expenses) are your depreciable items- the investment property itself and the capital improvements you make to it. These non-operational costs are not written off against income in a single year, but are instead recovered over a preset period of time through depreciation. For example, residential rental property is depreciated on a 27.5 year timeline, while Appliances are depreciated on a much shorter 5 year timeline. Read more detail from the IRS here.
If you have basis and accumulated depreciation information in your old accounting system and want to transfer it over, you need to first create Fixed Assets in REI Hub. You should
create separate Fixed Assets
for each Property and any tracked capital improvements (a kitchen renovation, a roof replacement, etc) that you are currently depreciating.
After the Fixed Asset has been created, enter the transactions that comprise the Asset. For transitioning accounting systems, you will use the
Opening Balance transaction type
to set balances for accounts like Buildings (depreciable basis), Land (non-depreciable basis), and Accumulated Depreciation. More on that below!
If you are not currently tracking your Fixed Asset information - perhaps your tax preparer is doing so on your behalf. That’s OK, this is an optional feature in REI Hub. You can easily keep your operational income and expenses in REI Hub without tracking Fixed Assets. However, Fixed Assets are essential if you want the full records of your investments in one location and the ability to create a Balance Sheet for your Portfolio.