When selling a property in Rentastic, it’s important to ensure that all financial data is handled correctly for accurate reporting and future reference. This guide will take you through everything you need to know, from categorizing your transactions to running essential reports, and finally archiving your property once it’s sold.
Never Delete a Property in Rentastic
The first key point to remember is: never delete a property from Rentastic after a sale. Deleting a property would remove all historical data, which is crucial for tax filing, reporting, and financial analysis. Instead, after all transactions related to the sale have been categorized, and you no longer expect new transactions, the property should be archived. Archiving keeps the property data intact while removing it from active views. For a step-by-step guide on how to archive a property, click here.
Tracking All Transactions, Including Sale Proceeds
Before archiving a property, you need to make sure that all transactions have been categorized. This includes:
- Income and Expenses: Categorize any rent received, maintenance costs, and other operational expenses incurred before the sale.
- Proceeds from the Sale: Make sure to account for the total proceeds from the sale of the property. This includes the sale price and any associated costs such as realtor fees or closing costs.
Formula for Calculating Proceeds:
To calculate the net proceeds from the sale of the property, use the following formula:
Net Sale Proceeds = Sale Price – (Mortgage Payoff + Closing Costs + Other Deductions)
Here’s a breakdown of the components:
- Sale Price: The amount the property was sold for.
- Mortgage Payoff: The remaining balance of any mortgage or loan attached to the property.
- Closing Costs: This may include realtor commissions, legal fees, and title transfer fees.
- Other Deductions: Any other associated costs, such as taxes or repair credits.
For a more detailed understanding of calculating sale proceeds, refer to this article.
Handling Liabilities
If there are liabilities associated with the property—such as mortgage payoffs or any loans—these need to be updated in Rentastic before finalizing the sale. Be sure to:
- Confirm the total balance of any mortgage or loan.
- Enter the payoff amount as an expense in the platform, categorizing it accordingly.
- If the mortgage is paid off as part of the sale, make sure this transaction is categorized properly to reflect the closing of this liability.
Step-by-Step Guide: Handling the Sale in Rentastic
Once you’ve categorized all income, expenses, and liabilities, you’ll follow these steps to finalize the sale in Rentastic:
Step 1: Categorize All Transactions
Before closing the sale, ensure every transaction associated with the property is categorized:
- Categorize all income (such as rent payments) and expenses.
- Ensure the proceeds from the sale are recorded under income, using the net proceeds formula outlined above. If they have not been loaded yet, you can manually add them through your transaction window.
- Categorize any closing costs, realtor commissions, and mortgage payoffs under expenses.
Step 2: Run the Necessary Reports
Once all transactions are categorized, you’ll want to generate reports that provide a clear financial picture:
- Money In/Money Out Report: This report helps you review all inflows and outflows for the property, ensuring all transactions have been accounted for.
- Cash Flow Report: Generates a detailed view of how much net cash flow was generated from the property over time, including before and after the sale.
- Profit and Loss (P&L) Report: Use this to summarize the property’s profitability. It’s crucial for tax filing and showing how much profit you made from the property, including the sale.
- Balance Sheet (Optional): If applicable, use a balance sheet to review assets, liabilities, and overall equity of the property before the sale.
Step 3: Archive the Property
Once all transactions have been categorized and reports generated, you can now archive the property. Archiving removes the property from active views but retains all historical data for reporting purposes. For guidance on how to archive the property in Rentastic, follow this archiving guide.