Bookkeeping for apartment rental

1

Hello,

I have an rental apartment in Europe and am trying to set up proper bookkeeping for it.

The apartment is part of a building that has collective charges (elevator, maintenance, utilities). Some of these charges can be passed on to the renter. Additionally, a part of the annual property taxes can be passed on to the renter.

The way it works is, the renter pays a fixed fee each month for their “charges”. I also pay “charges” quarterly to the building management (my payments include both money the renter owes + things I owe, but they amounts aren’t separated at that point)

Then, in ~June of the next year, the building sends over a total list of charges from the previous year, with a breakdown of how much can be attributed to the renter (per law). Then the renter has to make up the difference the next year.

I was wondering how to best model this. I was trying to set it up using special accounts but I’m not sure of the best way to model this.

The general idea I was thinking was to set up a special account for renter paid charges as a liability. As the renter pays their ‘charges’, this credits this special account.

As I pay the overall charges to the building, this goes to an ‘owner charges’ expense account.

Then, once I get the final accounting after the end of the year, I create a journal entry to move $x from ‘owner charges’ to the ‘renter charges’ account. This will then show if the renter owes more money or not.

However, another complication is that the building itself issues invoices for the quarterly charges and maintains a credit/debit balance, and the journal entry sends the money to another account but doesn’t account for the fact that this money was also paid to the building. There are also issues with year boundaries… I feel like I should set up the building as a supplier with invoices and so on, but I’m not sure how to model this with the inflows from the renter and managing those amounts as a sort of sub-amount over total building charges owed (And these expenses are treated differently - building charges I pay are deductible while ones the renter pays are basically pass-through, and are basically neither income nor expense)

2

Hi @marjar,

There’s your clue.

Why not keep those under Billable expenses? Then these balances will appear under each Customer.

See this guide for more detail:

3

Thanks. This seems to be a more straight-forward way. I actually got it mostly working using a special account, but modeling as a billable expense is probably simpler.

I think I also sorted the invoicing issue - what I do is, for all of my payments to the building, I put them towards accounts payable, then at the end of the year I create a multi-line “invoice” that captures the owner and renter charges total for the year, and draws down the AP. The renter chargers are assigned to the renter pre-pay (in your revised approach above I would assign to billable expenses) and owner charges are simply listed to an owner charges expense account.

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4

If you get all the Debits and Credits correct, then your method is also correct.

However, just in case you wanted to reduce your work load, it’s good to know that there’s another tool