See Also Tenant Moves to New Unit
Changing a Unit's Ledger from Owner to Property
Owner dies, estate takes over
How to PDF Document #243
This section covers the situations where a unit is sold or transferred to a new owner and where the percentage of ownership of a unit changes. In most cases, the old owner is responsible for 1099 income prior to the ownership change date and the old owner needs a financial statement for tax purposes.
Several things must be taken into account when a unit changes ownership, including outstanding charges against the tenant, outstanding invoices, rent money paid to the wrong ledger, and security deposits.
A. The cleanest procedure is to start fresh with the new owner.
Create a new owner, property, unit and tenant profile per the circumstances of the new ownership. Determine the cutoff date for transfer of ownership.
Step 1
Use the procedure for Tenant Moves to a New Unit – Different Ledger (owner or property).
Step 2
Print a Unit Report, Cash Flow Summary limited to the unit, with a date range from the beginning of transactions through the day prior to the transfer. Print the same report starting with the transfer date through today’s date.
Determine the amounts for each income and expense that belong to the new owner’s ledger. Do a journal transfer to adjust the ledgers.
Point Unit to New Owner
Only use this if there are no unpaid charges due to the old owner and the old owner has no unpaid invoices.
| 1. | Go into the Unit Profile. Click on Change Ledger and OK to the warning. |
| 2. | Change the ledger to the new owner profile. |
| 3. | You will have to do a journal transfer to move the security deposit money as it is still pointing to the old owner. |
Bank is Escrow bank.
First Line Item: Account code is SD, Ledger is New Owner, Amount is positive
Second Line Item: Account code is SD, Ledger is Old Owner, Amount is negative.
B. Let new owner take over the unit and tenant history.
This should only be used if there are no unpaid charges due to the old owner and the old owner has no unpaid invoices. This has the advantage of keeping the unit and tenant history intact, but the disadvantage of combining the old and new owner ledger transactions.
If the unit is owned by a property ledger instead of an owner ledger, see Section C.
It also works if an owner dies and the estate is taking over.
1.
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Print year-to-date detailed and summary statements for the old owner.
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2.
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Select the owner (old) profile from the Find List. Click on <<Create a new profile from the Selected Profile>>. Modify the ID by adding a #2 or something and save. Do not change the address information - this will become the profile for the old owner.
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3.
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Change the old owner profile to contain the new owner information. Changing the ID and long description still retains the history and pointers that belonged to that profile. All charges are now owed to the new owner. If you are using HeroPM to upload statements, changing the ID will delete the old ID (owner) from HeroPM. If you want to maintain that history, don't change the ID, just the long description.
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4.
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To adjust tax information on both owners, do a journal transfer. Use a date of a day before the ownership transfer. The net change to each ledger is zero. Go to GL, Journal Transfer. Select the bank account. Enter the following line items, where Amount = year-to-date taxable income:
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First line item Account = rent
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Second line item Account = rent
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Third line item Account = miscellaneous income*
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Fourth line item Account = miscellaneous income
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Note: Line items 1 and 2 transfer the total rent amount received by the old owner to his new ledger. Line items 3 and 4 cause the net effect of that transfer to be zero.
* Make sure miscellaneous income has an Account Type of income or other income.
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