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I'm new to GNUCash and creating a new GNUCash file to track my rental. I have a security deposit account with my bank, and am trying to make sure I get this all setup correctly.

In quicken, I had an account for the deposit account and a liability account for amount due back the renters (so it didn't appear I had extra money). I expect that's what I'd want as well, a liability for the deposit and an asset account for the money. However, I also need to "receive" the deposit from the renters as an income? I'm not quite sure how to set this up correctly using GNUCash's double entry bookkeeping. Any help/recommendations are appreciated.

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    To the member who voted to close - 'Accounting' is on topic as it relates to an individual, not for a company. This question looks ok to me.
    – JTP - Apologise to Monica ♦
    Commented Jun 5, 2017 at 10:53

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It's still an asset because you're keeping it on your books in an interest bearing account. And it's still also a liability because as you note, the money is not technically yours and you owe it to the renter until you settle at the end of the lease/term. Thus, I'd recommend setting the security deposit up in two accounts - an asset account and a liability account. The two will cancel each other out so it won't add to your net worth or equity.

If the money is in a bank account that's shared for other purposes, you can create a sub account for the security deposit:

Assets->Savings->Bank->Security Deposit: $1500

and the liability can simply be:

Liabilities->Security Deposit: $1500

You of course can modify these to best fit your account structure (e.g. organize by property, etc).

Finally, instead of transferring the money from an 'Income' account to your savings account, you transfer it directly from the liability account in one go:

Security Deposit Example

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