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Level 1

Real estate Question - linking payments received and payments distributed on specific properties

My question is somewhat difficult to put into words.  My real estate business buys properties and resells them with seller financing.  Often there is an underlying mortgage that we pay every month.  How do I set this up in Quickbooks? 

 

I'll use the below example of a property:

 

123 Main Street, Anytown USA

Bought for $80,000

Sold for $130,000 with owner financing

 

Monthly payment TO bank:  $800

Monthly payment FROM owner financed buyer:  $1200

 

My questions are how to best categorize these transactions?  Anything else I need to setup in Quickbooks for these?

1 Comment
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Level 15

Real estate Question - linking payments received and payments distributed on specific properties

I hate to say this, but you need to get with a tax accountant on this one.


The payment you make is mortgage pay down and interest expense at the minimum, and maybe insurance and property tax escrows too

A portion of the payment you receive should be calculated as interest income from the date of the last payment to the date this payment is received, QB can not do that. When you know that split, the interest portion is income and I expect you will have to 1098 the buyer at year end for that


What I do not know is how the cost of the property is apportioned out monthly as an expense against the purchase income, the amount of the incoming payment less interest income in other words. Not to mention how to do it if the buyer pays additional principal with each payment.

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