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I recently bought a vacation property with two friends that we intend to use part-time and rent part-time. All three of us are on the deed and mortgage. Equity, income and debt are all split equally 33.33%. We've set up a shared bank account to deposit rental income and we're making payments on the mortgage from this shared account.

We are also each funding the shared account every month with a fixed amount of cash as a "reserve fund" to cover things like insurance payments, repairs, capital improvements, etc.

I've set up T-accounts for the house as follows:

  • Property (A)
  • Cash (A)
  • Mortgage Payable (L)
  • Supplies (L)
  • Shared Partner Equity (basically Stockholder's Equity)
  • other accounts like Taxes Payable (L), Prepaid Insurance (A), etc.

I'm struggling to figure out how to represent the three individual partners through T-accounts. We want to track rental income separately for tax purposes, so I could set up three payable accounts:

  • Partner #1 Rental Income Payable (L)
  • Partner #2 Rental Income Payable (L)
  • Partner #3 Rental Income Payable (L)

But I'm not sure how to represent the monthly reserve funding payments. Is a receivable for each partner the right solution?

  • Partner #1 Funding Receivable (A)
  • Partner #2 Funding Receivable (A)
  • Partner #3 Funding Receivable (A)

And then realize the amounts on the day the cash transfers to the shared account? How should this reserve funding be considered from the perspective of the house? Is it "income"?

Thanks,

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    What does “T” represent? Is it just the visual representation of a ledger?
    – Lawrence
    Nov 4, 2021 at 3:36
  • Yes, just a name for the ledger that we learned in accounting classes. I'm basically trying to figure out how to represent individual partner accounts in relation to the joint accounts. Are they revenue or receivable?
    – biegel
    Nov 11, 2021 at 18:38

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