From: NYC, NY
Dear TaxMama,
I am a real estate investor in NYC and Maryland
and have purchased several properties.
My dilemma is that I not quite sure how to record
these purchases in Quickbooks.
Below are the details for one of the NY properties. I will
use your response as a model for the others:
[loooooooooong list of expenses
deleted]
Additionally we contributed $15,000 during a 2-month period to cover
various rehab expenses.
Finally, We refinanced the property
at $500K pulling out some equity of $85K of will $52K was distributed evenly
between the partners for repayment of cash we invested.
My questions
are:
- How do I record the purchase?
- how do I record the capital from
partners?
- how do I record HUD-1 fees/closing
cost?
- How should I record rehab expenditures?
- How do I record Refinance and payoff
of prior
loan? (should the closing cost be entered in the same
manner as in Question 3?)
- How do I record Equity?
- How do i record distribution
of Equity to partners?
- How do I record the paydown
of Principal and
Interest related to monthly payment. (my monthly payment
also includes escrow amounts--how do i record those?)
Fred
Dear Fred,
If you can afford to buy the properties, you
can't afford not to have your own tax professional.
[TaxMama was being [polite here]
Ask TaxMama is just a free service to guide to
additional information, where possible. I can't do your
journal entries. It would take me at least a half hour
to write out one entry and explain it to you. And to
answer ALL those other questions and explain accounting
procedures to you - well, count on at least two more
hours, minimum.
That's the function of your bookkeeper or, preferably,
your tax professional. Hire them. Pay them for their time.
[Unsaid at the time, but...really...what kind of idiot
embarks on a million dollar property buying spree
without working with a tax professional who is solidly
grounded in real estate tax and accounting????]
Where can you turn to get specific information about
how to book a real estate purchase? Good question.
I honestly don't know. These are things I learned during
my 10 years in college in the course of my degree and
my 15+ experience handling taxes and accounting for
real estate investment and mangement companies.
Well, gee, here's a book
you can get for only $295.
You might explore some of these hits on Google.
Search was for "bookkeeping for real estate journal entry"
But really, if you are investing in real estate, you do
need someone by your side to handle the bookkeeping and
tax set up and issues. It will save you a fortune in the
long run.
(Besides, there are a couple of ways to book your
particular transaction, depending on your long-term
goals for the building.)
Best wishes,
Eva Rosenberg, MBA, EA
