TaxCycle | Products | Pricing | Training | Documentation | Support | News

T776 - Tenant not paying rent - expensed?

If you’re renting a property to tenants who decide not pay rent for a few months before you’re able to move them out are rent none payments expensed?

Generaly, when you perform a service for a client you book the sale and if they eventually they don’t pay (after you have made reasonable attempts to collect & documented correspondence) there is a bad debt expense booked, which essentially nets the transaction out to zero:

e.g.
A/R XXX
SALES XXX

BAD DEBT

BAD DEBT EXP XXX
A/R XXX

NET EFFECT ON INCOME STATEMENT IS ZERO

Does the same logic apply to rental income as it pertains to the T776?

Yes, the logic is the same, but is unnecessary on the T776. Simply report the rent actually received.

2 Likes

That what I do also. If report the income, just write it off as expense, as bad debt.

1 Like