Introduction
Managing rental properties on behalf of an owner means handling money that isn't yours — rent collected, deposits held, expenses paid, and a balance owed back to the owner. This guide walks through the full cycle: setting up your accounts, collecting the tenant's deposit, collecting rent, paying property expenses, remitting the balance to the owner, recording your service fee, and refunding the tenant's deposit.
To illustrate, here's the example scenario used throughout this guide:
Item | Amount (RM) |
Tenant Security Deposit | 2,000 |
Rent collected | 5,000 |
Utilities paid | 800 |
Your service fee | 500 |
Balance remitted to owner | 3,700 |
1. Initial Setup – Chart of Accounts
Before recording any transactions, set up these two accounts so rental money is tracked separately from your own income.
1.1 Holding Fund Account
Used to record rental collected on behalf of property owners.
Accounting > Chart of Accounts > +New
System Type: Leave empty
Type: Current Liability
Name: Holding Fund – Rental Collected on Behalf
1.2 Tenant Security Deposit Account
Used to record refundable deposits collected from tenants.
Accounting > Chart of Accounts > +New
System Type: Leave empty
Type: Current Liability
Name: Tenant Security Deposit
2. Collecting Tenant Security Deposit (Refundable)
Security deposits belong to the tenant until refunded, so they're recorded as a liability — not income.
Step 1: Issue Invoice for Deposit
This keeps the deposit off your income statement from the moment it's collected.
Sales > Invoices > +New > select the "Tenant Security Deposit" account code
Example:
Issuing an invoice for a tenant security deposit of RM2,000.
Double Entry:
Debit Account Receivable RM2,000
Credit Tenant Security Deposit RM2,000
Step 2: Record Deposit Payment
This clears the receivable once the tenant's payment actually comes in, while the deposit stays booked as a liability.
Sales > Payment > +New > Deposit To: Cash / Bank account
Example:
Recording receipt of the RM2,000 deposit payment.
Double Entry:
Debit Bank RM2,000
Credit Account Receivable RM2,000
3. Collecting Rental (Holding Fund)
Rent collected on behalf of the owner isn't your income — it's recorded under Holding Fund – Rental Collected on Behalf (liability) until it's paid out.
Step 1: Issue Rental Invoice
This keeps the rent out of your revenue until it's settled with the owner.
Sales > Invoices > +New > select the "Holding Fund" account code
Example:
Issuing a rental invoice of RM5,000.
Double Entry:
Debit Account Receivable RM5,000
Credit Holding Fund – Rental Collected on Behalf RM5,000
Step 2: Record Rental Payment
This moves the rent into your bank while it remains held for the owner.
Sales > Payment > +New > Deposit To: Cash / Bank account
Example:
Recording receipt of the RM5,000 rental payment.
Double Entry:
Debit Bank RM5,000
Credit Account Receivable RM5,000
💰 Holding Fund balance: RM5,000
(RM0 opening balance + RM5,000 rental collected)
4. Paying Property Expenses (Utilities, etc.)
Expenses paid on behalf of the owner reduce the Holding Fund balance, not your own expense accounts.
Step 1: Record Supplier Bill
This charges the expense against the owner's funds instead of your own.
Purchases > Bills > +New > select the "Holding Fund" account
Example:
Recording a utilities bill of RM800 paid on behalf of the owner.
Double Entry:
Debit Holding Fund – Rental Collected on Behalf RM800
Credit Account Payable RM800
Step 2: Record Bill Payment
This settles the supplier and reduces what's left in the Holding Fund.
Purchases > Payment > +New > Pay From: Cash / Bank account
Example:
Paying the RM800 utilities bill from the bank.
Double Entry:
Debit Account Payable RM800
Credit Bank RM800
💰 Holding Fund balance: RM4,200
(RM5,000 − RM800 utilities paid)
5. Paying Balance to Property Owner
After deducting expenses and your service fee, the remaining balance is paid out to the owner.
Step 1: Record Bill to Owner
This formally records what's owed to the owner before it's paid out.
Purchases > Bills > +New > select the "Holding Fund" account
Example:
Recording a bill to the owner for the RM3,700 balance owed.
Double Entry:
Debit Holding Fund – Rental Collected on Behalf RM3,700
Credit Account Payable RM3,700
Step 2: Record Payment to Owner
This clears the Holding Fund down to only what's left for your service fee.
Purchases > Payment > +New > Pay From: Cash / Bank account
Example:
Paying the owner the RM3,700 balance.
Double Entry:
Debit Account Payable RM3,700
Credit Bank RM3,700
💰 Holding Fund balance: RM500
(RM4,200 − RM3,700 paid to owner)
6. Recording Service Fee Income
Your service fee is income earned by the company. It's transferred from the Holding Fund into your Income account.
Issue Cash Sale Invoice
This is the point where you actually recognise revenue, clearing the Holding Fund to zero in the same transaction.
Sales > Invoices > +New > Cash Sale > select the Service Income / Income account > Deposit To: Holding Fund account
Example
Recording a service fee of RM500.
Double Entry:
Debit Holding Fund – Rental Collected on Behalf RM500
Credit Sales Income RM500
💰 Holding Fund balance: RM0 ✅
(RM500 − RM500 service fee — fully cleared)
7. Refund of Tenant Security Deposit (Full Refund)
When the tenancy ends and the deposit is fully refundable:
Step 1: Issue Credit Note
This reduces the deposit liability without needing to apply it against any invoice.
Sales > Credit Note > +New > select the "Tenant Security Deposit" account code — no need to apply it to any invoice
Example:
Issuing a credit note for the full RM2,000 deposit refund.
Double Entry:
Debit Tenant Security Deposit RM2,000
Credit Account Receivable RM2,000
Step 2: Refund Payment to Tenant
This pays the money back out and closes out the credit note.
Sales > Refund > +New > Pay From: Cash / Bank account > Apply to Credit Note
Example:
Refunding RM2,000 to the tenant.
Double Entry:
Debit Account Receivable RM2,000
Credit Bank RM2,000
8. Deposit Deduction (If Applicable)
If part of the deposit is withheld — for example, for damages or unpaid utilities — record it in this order:
Record the deduction amount first.
Issue a Credit Note for the remaining refundable amount.
Process the Sales Refund for the actual amount paid to the tenant.
This ensures the deposit liability is reduced correctly and the refund amount is accurate.
Example scenario:
Deposit collected | RM2,000 |
Damage deduction | RM300 |
Refund to tenant | RM1,700 |
Step 1: Record the Deduction (Purchase Bill)
This charges the deduction against the deposit liability instead of the refund itself.
Purchases > Bill > +New > select the "Tenant Security Deposit" account code
Example:
Recording a RM300 deduction for damage to the property.
Double Entry:
Debit Tenant Security Deposit RM300
Credit Account Payable RM300
Step 2: Record the Deduction Payment
This settles the deduction with whoever is owed (e.g. a repair supplier).
Purchases > Payment > +New > Pay From: Cash / Bank account
Example:
Paying the RM300 deduction to the repair supplier.
Double Entry:
Debit Account Payable RM300
Credit Bank RM300
Step 3: Issue Credit Note for the Remaining Refund
This reflects only what's left owing to the tenant after the deduction.
Sales > Credit Note > +New > select the "Tenant Security Deposit" account code
Example:
Issuing a credit note for the remaining RM1,700 refundable amount.
Double Entry:
Debit Tenant Security Deposit RM1,700
Credit Account Receivable RM1,700
Step 4: Refund Payment to Tenant
This closes out the tenant's deposit liability completely.
Sales > Refund > +New > Pay From: Cash / Bank account
Example:
Refunding the remaining RM1,700 to the tenant.
Double Entry:
Debit Account Receivable RM1,700
Credit Bank RM1,700
9. Monitoring Account Balances
To keep track of rental and deposit transactions, use the General Ledger Report.
Report > All Reports > General Ledger
9.1 Holding Fund Balance – Rental Collected on Behalf
Use this report to verify:
Total rental collected
Expenses paid on behalf of the owner
Service fee deducted
Balance payable to the owner
Example:
This ledger shows the RM5,000 rental collected, RM800 utilities paid, RM3,700 paid to the owner, and RM500 service fee — ending with a nil balance.
9.2 Tenant Security Deposit – Full Refund
This confirms the deposit liability is cleared once fully refunded.
Example:
This ledger shows the RM2,000 deposit collected and then fully refunded.
9.3 Tenant Security Deposit – Partial Refund
This confirms the deposit liability reflects the deduction correctly before the remaining amount is refunded.
Example:
This ledger shows the RM2,000 deposit collected, a RM300 deduction, and the remaining RM1,700 refunded.
Frequently Asked Questions (FAQ)
1. Why can't I just record the rent collected as my company's income?
Because the money doesn't belong to you — you're collecting it on behalf of the property owner.
Only your service fee is actual income. Recording the full rent as income would overstate your revenue and understate what you owe the owner.
2. What's the difference between the Holding Fund account and the Tenant Security Deposit account?
Holding Fund holds rent collected on behalf of the owner, which gets used to pay expenses, your service fee, and the owner's balance.
Tenant Security Deposit holds refundable deposits that belong to the tenant, not the owner — it should only ever be reduced by a refund or an agreed deduction, never used to pay owner expenses or your fee.
3. What if I have multiple properties or owners — do I need a separate Holding Fund account for each?
You can use one Holding Fund account for all owners and track each owner's balance separately using the Contact field on each transaction, or set up a separate Holding Fund account per owner if you prefer clearer separation on the Chart of Accounts.
Either way, always run the General Ledger filtered by owner before making a payout, so you're not paying out the wrong owner's funds.
4. What if the Holding Fund balance goes negative?
This usually means you recorded an expense or your service fee before enough rent had actually come in to cover it.
Check the General Ledger for that owner to see which bill or invoice caused it, and hold off on paying out anything else from that fund until enough rent comes in.
5. Do I record my service fee as income even if I haven't been paid yet?
The steps in this guide use a Cash Sale invoice, which recognises the fee as income and settles it immediately — since it's paid straight out of the Holding Fund, there's no waiting for payment separately.
If you invoice the owner separately and get paid later, use a regular Credit Sales Invoice against your Sales Income account instead, so it goes through Accounts Receivable like any other invoice.
6. How can I track each property in reports, if I manage more than one?
Use the Tagging function to tag every transaction with the relevant property, then filter your reports by tag to see each property's rental income and expenses separately.
Refer to Setting Up and Using the Tagging Function for the setup steps.
7. Can Bukku automatically generate the monthly rental invoice for me?
Yes — you can set this up as a Recurring Instruction so it's generated automatically each month, without needing to re-enter the same details every time.
Refer to Setting Up Recurring Transactions to set this up.
