How to handle personal transactions in a rental account

How to handle personal transactions in a rental account

Have you ever grabbed the wrong card by mistake 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 both personal and rental expenses.  Either way, it is helpful to be familiar with the different ways to handle personal transactions 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 has a different impact on your records 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 represents 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 be able to reconcile your rental business accounts, this is how should handle personal transactions.  Every single transaction must be booked in some fashion to be able 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.  In that scenario, the Ignore or Delete options may be a better fit.

2) Ignore the Imported Transaction

Selecting the Ignore action takes the transaction out of Unbooked status, but leaves it in the Import Feed.  No Booked Transaction is created, so this Ignored transaction will have no impact on your actual financials or reports whatsoever.

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 to retain visibility into all activity in the account. 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 on any of those, Ignoring is the safest option.

If at a later date you realize that a Deleted transaction was actually a rental property expense, the easiest thing would be to simply add that transaction to the system manually.

4) Contact us with any questions! 

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