How should I record capital gain made from selling a property? for CGT? In balance sheet the asset is showing as negative because it was sold more than the buy price. thx

Hi Teddy2, Thank you for reaching out on this. I would like to suggest best to check with your accounting professions on this. Intuit provides "Matching making" program called Find a ProAdvisor for business owner to connect with QuickBooks Online certified accountants and bookkeepers. Here is a link if you want to find out more:

• Find an accounting advisor near you
  • https://quickbooks.intuit.com/au/find-a-proadvisor/

Hope this helps!

Thanks but sorry your answer is not helpful. I know I can pay and ask a pro advisor.
I don't want to pay just for this question, and that's why I'm asking here. Surely there is a generic advice/procedure to follow.
Apparently the closest advise I could find is from here, just thinking which account to use to implement in QBO
https://www.accountingtools.com/articles/how-do-i-record-the-disposal-of-assets.html
https://central.xero.com/s/article/Dispose-of-or-sell-a-fixed-asset-AU

Hi Teddy2,

Normally, we would record the sell of an asset via journal entry like the samples in article you shared. With regards to the posting accounts, we would recommend seeking advice from your accountant.

I found a thread related to your scenario. Please open this link: https://intuit.me/31C6k5Q

If you have other questions, you can always post back.
 

Thanks, that link helped more than the first answer.

Adding a new income account, I can see Other Income: Loss on disposal of assets

Use Loss on disposal of assets to track losses realised on the disposal of assets.

but no "Gain on disposal of assets" why is that?

I'm going to use that for now and just rename it to gain or loss. i'll see how it goes.

I'm just wondering why does it seem like you just don't want to answer /give an example of which income account to use, even though you know.

Are you worried someone might sue you for giving general bookkeeping advice when you are not an accountant?
Isn't it the asker's responsibility if one uses your advise and it turned out to be not the right way according to the tax office?

Can't you just write a disclaimer like in any other financial website: the advice given is of general nature, please ask a professional financial advisor bla bla bla..

Thanks.

They don't want to name a specific account because it really depends on what type of business you're in.  Consider some examples (I assume by "property" you mean a piece of real estate):

• If you flipped the property, the property's basis could be considered as Cost of Goods Sold.  The recognition of the gain could be treated different ways, but likely falls to Retained Earnings.
• If the property was a pure investment property that you operated for rental income and then eventually sold, the gain is often recorded as if it's the sale of an investment, often under a 'Realized Capital Gain' account.
• If the property was purchased, further developed, and then sold, the gain may be split between current income and capital gain.  This depends on what the nature of your other business activity is.

Point being the question doesn't have a generic answer because it's really business dependent... and giving a generic answer may cause bigger problems than the benefits of just giving an answer.  Since the way the purchase was accounted has to match the way the disposition is accounted, the resultant answer is: "Talk to your tax advisor / accountant."

That said, I'd say a majority of the time for small businesses, the answer is a newly created 'Realized Capital Gain' account (if QBO didn't automatically create one for you based on your answers to questions at company setup time).  

Thanks @JustinRSD for your reply, Ihave completely forgotten about this question from last year.
And you are right. it is house for rent and finally sold for with some profit.

My question was more of a QBO application specific question and not a concept problem. i.e. which account to create specifically on QBO because i could not see "Realized Capital Gain" account anywhere,  and i could only see "Loss" in the default names.

i still think giving a generic answer for the most common scenario is ok, because without that information, the asker will look or try whatever that might work anyway and that might or might not create more problems too.. so at the end an answer is appreciated

this is what i ended up doing to avoid negative figure in balance sheet: (simplified example)

1 jan 2015 bought the property for 100

journal entry as debit in fixed asset:house a, credit in bank account

1 jan 2019 sold the property for 120

journal entry as debit in bank account 120

, entered 100 as credit in fixed asset:house a

, entered 20 as credit in other income:realised capital gain/loss (which i chose from "Other Income: Loss on disposal of assets" in the new account pop up and just renamed it)

this way the fixed asset:house balance becomes 0.

if it was not split into other income, and all 120 is credited to the fixed asset, the balance becomes -20

i don't know if it is right or wrong from an accountant's point of view, but it looks right to me.