If your property manager buys something like a new air-conditioner, hot water system or dishwasher and pays for it using your rental income, it will show on your rental statement rather than your bank feed. Because it’s a capital asset, it must be depreciated, not claimed as a normal expense.
To get this right in TaxTank, you need to do two things:
Step 1: Enter the Rental Statement
Enter the rental statement like you normally would, then add the asset cost as an adjustment under ‘Rent not Paid Out (Held by Agent)’. This tells TaxTank that the money never hit your pocket, and it will automatically recalculate the gross rent to match your statement.
💡Pro tip: If your agent used earlier rent to cover the asset cost, simply combine ‘Rent not paid out (Held by Agent)’ with ‘Funds held by Agent’ to keep your statement balanced. <Read more>
Step 2: Add the Asset to Depreciation
Next, jump into the 'Depreciation' tab and add the $1,800 air-conditioner as a new asset. Since it’s a capital item, TaxTank will spread the deduction over its effective life and keep your claims accurate year after year, all automatically!
Need more help adding depreciation? Check out our support article for more information. How to add property depreciation