How to Apply a Security Deposit to an Open Invoice in QuickBooks

When it comes to real estate accounting, there are so many nuances and technicalities that it becomes hard to keep track of how to do what. Once you put it into practice, everything seems to become second nature—but during the learning process, it is common to run into a problem and ask, “How do I even enter this into QuickBooks?”

One of our clients ran into that problem when she needed to process security deposits for her real estate business. Check out what we told her below.

Q: How do I apply a security deposit to an open invoice in QuickBooks? I need to apply the entire deposit, not just part of it.

A: First, let’s define the key term here. A security deposit is a payment required by a landlord to ensure that a tenant pays rent in a timely manner and keeps the unit in good condition. When the tenant vacates the rental (a.k.a. moves out), you can return the security deposit if they upheld their end of the deal. If not, you can apply it to cover unpaid rent or the cost of damage repairs.

To apply a security deposit to an open invoice:

  • Create a credit memo
  • Use Security Deposit as the Item

When you save the credit memo, a window like the one shown below will appear and QuickBooks will ask you what you would like to do with the credit.


  • Select Apply to an invoice and then click OK
  • Choose the invoice to which you wish to apply the security deposit
  • Finally, click Done

This process applies the security deposit, in full, to the appropriate invoice. Double-check the tenant register to ensure that the credit was applied to the correct invoice.

That is just the tip of the iceberg! There is so much more to learn about real estate accounting, and you can get all the best QuickBooks tips and tricks from our team here at Fast Trac Consulting.

Gita Faust

About the Author

Gita Faust has over 30 years of accounting experience in the real estate and property management industry, Gita Faust is more than just a real estate investor; she is also popular for her work as an accountant, consultant, mentor, speaker, QuickBooks Top ProAdvisor, QuickBooks Solution Provider, member of Intuit’s Trainer/Writer Network, and, of course, author. Gita is well-known for her exemplary leadership and advisory skills. In fact, she even helped pioneer the adaptation of QuickBooks to suit the needs of professionals in real estate and property management. To share her knowledge she has written a series of courses titled Simplified Accounting Solution, which provides step-by-step guidance for those working with QuickBooks.

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