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T776 - Tenant not paying rent - expensed?


#1

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?


#2

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


#3

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