Residential Property Management/Escrow deposits

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Question
When tenants escrow deposits are held in a separate account just for deposits and part of the deposit is forfeited to the owner because of repairs...do we transfer that amount from escrow into the main account so it will show up as income on the owner's 1099 and then disperse the money to the owner from there or do we just disperse it straight from the escrow account and not report it on the 1099 as income to the owner?

Answer
Hi Stacy.  Any forfeited deposits are definitely income to the owner.  If you are using qickbooks, you can still write a check from your deposit trust account straight to the owner and the bookkeeping should pick that up as income.  The 1099's are based on checks written to the owner.  If you're bookkeeping is not set up that way, then transfer the money and write the check, or you can do the transfer with a Journal Entry.  Whichever way is easier.  When I'm looking at deposits held, I want to see where the money went, so I like to be able to look and see that a check was written to the owner, not just some random transfer.  Hope that helps and feel free to email again if you need something else or wold like me to clarify.  Stefani

Residential Property Management

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Stefani Nachatilo

Expertise

I can answer basic beginner questions like "How do I get started buying my 1st rental property" and "What to look for when taking an application on a tennant." "Here`s what capital I have to work with -- what are my options?"

Experience

I started purchasing rental properties in 1995 with my husband, part-time, while working a full time job. We started with very little seed money. One year we purchased 11 single family units. Recently we bought 5 properties in 2 months. We purchased our 1st small apartment building in 2004. I am now managing our units and doing property investing and management full time.

Publications
My Husband and I have written a book for the new real estate investor, "Weekend Warrior's Guide to Real Estate Investing", published by Tate Publishing. Can be purchased from TatePublishing.com or Amazon.com. Have been published in Real Profits by Carlton Sheets and Discount Buyer's Association monthly magazine.

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