How to split a bank transaction between rental income and property fees or charges deducted

This article explains how to record rental income that has had property agent fees or charges deducted, if you have an unincorporated landlord FreeAgent account.

Please note that the unincorporated landlord account type is currently only available if you work with an accountant who is a FreeAgent Partner.

If you’re an unincorporated landlord and rent out a property which is managed by a property agent, you’ll need to follow the steps below to split the bank transaction in FreeAgent between the rental income and agent fees.

1. Navigate to the bank transaction

Once the relevant bank transaction has been imported into your FreeAgent account via a bank feed or uploaded from a bank statement, navigate to the 'Banking' tab at the top of the screen and select 'Bank Accounts' from the drop-down menu.

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Choose the relevant bank account from the list.

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Select the relevant transaction and then select 'More Options'. Alternatively, you can open ‘More Options’ by pressing the 'Alt' key or ‘Option’ key, depending on your device, at the same time as selecting a bank transaction.

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2. Explain the proportion that is ‘Rental Income’

If you’re recording your rental income by explaining the bank transaction, select ‘Rental Income’ from the ‘Type’ drop-down menu. If you’ve created an invoice to record your rental income, select ‘Invoice Receipt’ from the ‘Type’ drop-down menu instead.

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Next, enter the full amount of the rental income, before any fees or charges were deducted, in the ‘Value’ field.

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Select the property that the rental income relates to from the ‘Property’ drop-down menu, then add a description for the transaction and select ‘Create New Explanation’ at the bottom of the screen.

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3. Explain the proportion that is property agent fees

Next, you will need to categorise the remaining balance of the bank transaction. You will notice that FreeAgent has created a new unexplained ‘Money Out’ transaction for the difference.

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To explain the remaining balance between multiple categories, for example agent fees and maintenance costs, select the new transaction, select ‘More Options’ and follow the steps to split the transaction between multiple categories.

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To explain the remaining balance to a single category, for example agent fees, select this new transaction and then select ‘Payment’ from the ‘Type’ drop-down menu.

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Select ‘Property Management Fees’ from the ‘Category’ drop-down menu. You can also create a custom category if you wish. If you’re unsure which category to select, please ask your accountant.

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Select the property that the fees relate to from the ‘Properties’ drop-down menu.

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Select ‘Explain Transaction’ to complete the process and split the value of the bank transaction between rental income and property fees or charges deducted.

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A record of the bank transactions having been explained will appear in your Audit Trail report.

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