Adding property basis - For past acquisitions
This article outlines how to add your property fixed assets and basis to REI Hub for properties purchased before the current accounting period (prior to your bookkeeping start date). For properties purchased in the current accounting period (after your bookkeeping start date) click here.
Adding your property fixed assets and basis will allow the property to be reflected correctly on your Fixed Asset Schedule and Balance Sheet. If you are working with a tax preparer or financial professional who is helping you manage your fixed assets and depreciation, this may be an optional step from a tax preparation standpoint. But it is essential if you want your REI Hub books to reflect the both the operational (revenues and expenses) and the capital (fixed assets and depreciation) parts of your business.
Properties that were purchased prior to the current reporting period are handled differently than those purchased in the period. Since the purchase occurred before your most recent tax filing, the initial basis of the property has been set, some depreciation has been claimed, and any deductible expenses have already been accounted for. Therefore, rather than calculating the basis of the home from the closing statement, you instead just need to enter the existing balances in your key fixed asset accounts.
Your key fixed asset accounts are Buildings (the depreciable basis), Land (the non-depreciable basis), and Accumulated Depreciation (the amount of depreciation taken thus far). You will take the closing balances for each of these accounts from your previous accounting system (or from your financial professional) and enter them as Opening Balances into REI Hub.
To enter in property basis:
Step One: Find or determine your key fixed asset account balances
These values will be entered as opening balances into REI Hub. Opening balances are dated the day before the current accounting period begins. Therefore, you need the closing balances of each of these accounts as of the same day. For example, if your REI Hub bookkeeping start date is 01/01/2021, you will enter the opening balance on 12/31/2020.
If you have been tracking your fixed assets in another accounting system, use the closing balances for the same day (ex. 12/31/2020). If your CPA or tax preparer has been tracking these numbers on your behalf, you can ask them for the balances.
Step Two: Add a fixed asset for the property
Here is our general article on creating a new fixed asset. Follow the prompts, making sure to choose:
- 'A Property' as the asset type
- The correct property from the options
- Residential or Commercial for the appropriate useable life.
Creating the fixed asset defines the characteristics of the asset. The next step is adding transaction(s) to populate the fixed asset values.
Step Three: Enter the values into the fixed asset
Open the fixed asset you just created. Click Add Transaction in the upper right corner and select Opening Balance:
The Opening Balance transaction defaults to the day before your current accounting period as long as you have a bookkeeping start date set. When inside a property fixed asset, it will also pre-select the key fixed asset accounts discussed above. Enter your balances for each account, making sure to enter Accumulated Depreciation as a negative.
Click Save Opening Balance.
Step Four: View in reports and reach out to us with any questions or for assistance!
Your new property fixed asset will now show on the Fixed Asset Schedule. The fixed asset values will also be reflected on the Balance Sheet report.