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Real estates set up

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I would like to know how to set up a real estate property I bought in quick books.

I saw that a lot of people are saying thatI need one Asset account and a sub-account asset account.

can someone explain why.

thanks!

QuickBooks Desktop

qbteachmtAnswer

"how to set it up as an asset?"

"I saw that a lot of people are saying thatI need one Asset account and a sub-account asset account.

can someone explain why."

Property is a Fixed Asset and it helps to give yourself Clarity. Like This:

123 Easy Street <== Parent level account, do not use

Subaccount: Basis Buildings <== Cost here, split off Land

Subaccount: Improvements <== not ongoing Repairs and Maintenance, but Improvements after purchase

Subaccount: Depreciation

Subaccount: Land <== Land never depreciates

lynda11_2

Setup depends on who you are and what you have. If you own one rental property, you can make your tenants a customers. If you own several properties, you can use classes to separate the properties and run separate profit and loss reports for each property. Tenants can still be your customers. You would classify each transaction.

If you are a property management firm, you would use the sub-customers. If you don't have the class feature, you can use sub accts. But it tends to make the chart of accts very large and cumbersome.

A

arkvalleyinfoAuthor

my question is how to set it up as an asset?

qbteachmtAnswer

"how to set it up as an asset?"

"I saw that a lot of people are saying thatI need one Asset account and a sub-account asset account.

can someone explain why."

Property is a Fixed Asset and it helps to give yourself Clarity. Like This:

123 Easy Street <== Parent level account, do not use

Subaccount: Basis Buildings <== Cost here, split off Land

Subaccount: Improvements <== not ongoing Repairs and Maintenance, but Improvements after purchase

Subaccount: Depreciation

Subaccount: Land <== Land never depreciates

N

Nieciebee

Question?

Under improvements, would you then create sub-accounts for those improvements (i.e., installation of new driveway, new roof, new fencing, etc. ) as some of these items are capital improvements and may be depreciated? Also, what about appliances?

Thanks.

A

ajcamp

The purpose of the Asset account is to track the real estate basis value, for depreciation purposes (as well as resale). So I would only put improvements in the Asset account that increase the basis value of the property which will then effect the depreciation schedule.

The treatment of appliances is a matter of preference. I would consider the purchase of the property including all appliances as part of the basis and depreciate the property. If you wanted to get more complicated, you can split off the appliances as their own assets, and lower the basis of the property accordingly. This will lower the basis of the property, which might increase capital gains taxes at resale. The benefit would be deducting the cost of the appliances as a write off the first year, since the appliances would be below the cap limit for fixed assets (typically $2500 ea).

S

sheikhislam

I am a real estate developer.
My transaction business transactions are as such:
1. I buy land. (Expense).
2. I pay construction monies to build a villa on the land. (Expense).
3. I pay for accessories such as AC/KITCHEN/FURNITURES ETC. (Expense).
3. I sell the finished estate to a customer. (Income).

How should I set up this process to keep a track of all the expenses starting from the value of the land purchase and profits?
Should I add my lands as inventory available for sell? or should I add them in the chart of accounts as Assets?

AlcaeusF

Hi there, @sheikhislam.

Welcome to the Community. Let me share some information about how you can enter them in QuickBooks Desktop.

There are several ways to record a sale of an asset in the system. The process will depend on your situation.

You can create a new account (gain/loss) for asset sales. I suggest using the Journal entry feature to track the amount. However, please note that we can't suggest which account you should use to debit and credit.

In case you need the steps, here's how:

Go to the Company menu and select Make General Journal Entries.
Fill out the fields to create your journal entry. Make sure your debits equal your credits when you’re done.
Select Save or Save & Close.

Also, you'll need an account in the chart of accounts to track all costs and purchase amounts. Other users use an asset account to add these types of transactions .

When you sell, you can use the service item type for the estate sale and record the sales price, then do a journal entry. However, I highly recommend seeking expert advice from an accountant to ensure your books are accurate and error-free. They'll be able to provide some suggestions about how you can keep track of the purchase and sale of the estate.

For additional reference, you can use the following articles to learn more about the chart of accounts, as well as tracking inventory assets and cost of goods sold in QuickBooks:

Fill me in if you have additional questions about how to handle the transactions in QuickBooks. I'm always here to help. Take care always.

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