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walton123
Level 2

real estate transfer fees - how should they be categorized in the chart of accounts?

In the chart of accounts, how do I characterize the transfer fee that a home buyer pays the seller (I am the seller)?  Is it a business expense, or income?  From the fee, I will pay a bookkeeper a portion of the fee I receive.

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Best answer February 23, 2021

Best Answers
john-pero
Community Champion

real estate transfer fees - how should they be categorized in the chart of accounts?

Transfer fees are what is paid to a government authority for the transfer of title, it is an escrowed liability and you as a seller would not even get to touch it as the attorneys would directly submit this to the county. You must be confusing your net proceeds or gain on the sale.  Some or all of this would be income, short or long term gain. What you do with it after that is up to you. Paying a bookkeeper is a separate expense.

 

If, as seller, you are referring to yourself  not as previous owner but as the broker or salesperson then what you have received is straight commission, reportable to you on a 1099 for the full amount and what you do with it afterwards is also up to you

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1 Comment
john-pero
Community Champion

real estate transfer fees - how should they be categorized in the chart of accounts?

Transfer fees are what is paid to a government authority for the transfer of title, it is an escrowed liability and you as a seller would not even get to touch it as the attorneys would directly submit this to the county. You must be confusing your net proceeds or gain on the sale.  Some or all of this would be income, short or long term gain. What you do with it after that is up to you. Paying a bookkeeper is a separate expense.

 

If, as seller, you are referring to yourself  not as previous owner but as the broker or salesperson then what you have received is straight commission, reportable to you on a 1099 for the full amount and what you do with it afterwards is also up to you

View solution in original post

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