Security Deposits in REI Hub
REI Hub allows you to enter and track security deposits from your tenants alongside your revenues, expenses, and other transactions. While security deposits are not a revenue or an expense and are not reported to the IRS on an annual basis, they are still a very important part of managing your rental property and its finances.
Security deposits have their own set of transaction templates in REI Hub to ensure accurate entry. You can view security deposit balances by property and unit on the 'Security Deposits Held' report, or view the individual transactions via the filter on the Booked Transactions page.
Entering Security Deposit transactions in REI Hub:
There are three different types of security deposit transaction templates in REI Hub. You will choose the transaction template that matches the action you are taking with the security deposit: receiving it, refunding it, or retaining it.
Security Deposit Received
Use the Security Deposit Received transaction template when you first accept a security deposit from a tenant. Receiving a security deposit is not revenue - it is your tenant's money that you are keeping in trust. Therefore, received security deposits are held on your balance sheet as liabilities.
If you have received a lump payment that is inclusive of rent and security deposit, split the transaction into the rent and security deposit components and book each piece individually as appropriate.
Security Deposit Refunded
Use the Security Deposit Refunded transaction template when you return some or all of a tenant's security deposit to them. Even though this is money moving out of your accounts, it is not considered an expense, as you are simply returning the tenant's money to them.
If you refund part of a security deposit and retain the other part of it, you will enter both a Security Deposit Refunded transaction as well as a Security Deposit Retained transaction.
Security Deposit Retained
Use the Security Deposit Retained transaction type when you keep all or part of a tenant's security deposit due to damages or past-due rent. This is considered revenue by the IRS because you are keeping these funds. If you enter in Security Deposit Retained transactions, you will see the revenue reflected in your reports.
Therefore, if you are retaining some or all of the deposit due to damage, it is generally a good idea to make sure you have the expense corresponding to the damage entered into the system as well to ensure you are not showing net revenue from retaining the deposit.
Viewing Security Deposit information in REI Hub:
There are two main ways to view the security deposits you have booked into REI Hub. You can either view the Security Deposits Held report for a summary based on date ranges, or you can view the individual transaction records on the Booked Transactions by using the filters.
View the Security Deposits Held Report
Navigate to the Reports page, and find the Security Deposits Held Report in the 'Other' box.
Select the desired date range, and click Update Filter. The report will provide a per property and unit breakdown of your security deposit balances and how they have changed in the time period.
The Ending Balance column shows the values as of the last day of your date range. If you selected 'Year to Date' then the Ending Balance column is showing your current security deposit balances as of today.
The Starting Balance column shows the values as of the first date of the range. The Additions and Subtraction columns, combined with the Starting Balance, net out to the Ending Balance.
View the specific transactions
Navigate to the Booked Transactions page, under the Transactions header on the left side menu. In the filter at the top of the page, update the 'Transaction Type' dropdown to either 'Security Deposits' - which will show you Security Deposit Received transactions, or 'Security Deposits Out' - which will show you Security Deposit Refunded and Security Deposit Retained transactions.
Optionally feel free to also update the 'Property' field at the same time to only see security deposit transactions for that one property.