FAQ > Managing Tenant and Lease Agreement Information

How do I track security deposits?

Tracking security deposits

Tracking security deposits is simple with SimplifyEm.com Property Management Software. Here’s how you can effectively manage security deposits throughout the tenant lifecycle:

Step 1: Enter Security Deposit When Setting Up a Lease

1. When setting up a lease for a new tenant, enter the security deposit amount due.

 


2. If the lease is already set up, you can edit the lease terms to add or adjust the deposit amount.
3. This amount will then appear in both the Rent Roll Report and the Tenant Payment History Report as the security deposit due.

Step 2: Record Security Deposit Collected

1. Once you receive the security deposit, go to the property worksheet.
2. Locate the tenant’s row and allocate the amount collected towards the security deposit due.

 

Step 3: IRS Reporting for Security Deposits

• If a tenant moves out and you retain any portion of the security deposit, the IRS requires it to be reported as income.

 


• SimplifyEm.com will ask how much of the deposit you returned, and it will automatically record the retained amount as Rental Income on your worksheet.

 

Step 4: Handling Security Deposits Used for Expenses

• If part of the security deposit is used for unit repairs or expenses, ensure you manually record the expense transactions on the worksheet to keep accurate financial records.

Important Reminders:

• Always track any portion of the security deposit you keep or return when the tenant moves out.
• Don’t forget to manually log any expense transactions if the security deposit was used to cover repairs or other costs.

By following these steps, you can accurately manage and track security deposits within SimplifyEm.com Property Management Software, ensuring compliance with IRS regulations and maintaining organized property management records.