Dealing with the deposit at the end of a tenancy

At the end of the tenancy, it becomes necessary to return the deposit back to the tenant.  Or retain at least some of it for dilapidations.  This guide covers the basic processes.

1. Deposit returned

In Income > Invoices, raise a negative income invoice for the amount returned and set it to the Tenancy Deposits category.

Tick Paid and set the Bank Account to be:

- Custodian Deposits if the deposit was returned from the custodian.

- Your bank account if you paid the money back yourself.

For example, if £500 was returned, set the amount in the invoice to be "-500"

2. Deposit retained to pay rent

There are two steps to this because there are transactions in Tenancy Deposits, Custodian Deposits, Accounts Receivable and the bank account to deal with.

Record a payment against the rental invoice for the amount paid.  Set this to the bank account and complete the reconciliation.

* If the deposit was not sent to a custodian, set the payment account to be Tenant Deposits and do not complete the next step.

Raise a journal in Accounting > Journals showing the money coming from the Custodian Deposits account to the Tenant Deposits account.

3. Deposit retained to pay charges

If some or all of the deposit was used to cover out of pocket expenses, you can record it like this.  Again, there are two transactions because of the reasons stated above.

Raise an invoice in Income > Invoices set to one of the Tenant Income (Non Rent) categories. Pay this from the bank account.

* If the deposit was not sent to a custodian, set the payment account to be Tenant Deposits and do not complete the next step.

Raise a journal in Accounting > Journals showing the money coming from the Custodian Deposits account to the Tenant Deposits account.

If you retained some of the deposit and returned the rest, enter one journal for the full amount of the deposit and then complete the invoice steps.