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How would someone enter the purchase of real estate into QuickBooks?

Hi. I need to enter the purchase of real estate into QuickBooks with a loan. The purchase price was extremely below market value, and the only appraisal information I have is from the county website for property taxes. I created accounts using a format found in QuickBooks where the property address is the parent account and the sub-accounts are the following: Building, Building Improvements, Land, Land Improvements, Storage Building, Shed, and Accumulated Depreciation -Buildings. I found it difficult to allocate the purchase price to the building, land, storage building, and shed based on percentages because the appraisal information from the county website is not the same as the bank appraisal. I do not have access to the bank appraisal. Is there another way to accurately allocate the purchase price or is it alright to put the entire purchase price into the building? The purchase price was $175,000 and the actual land value was estimated to be around $400,000 because it is commercial. 

I have a second question also, is it alright to keep all accumulated depreciation for different buildings into one single accumulated depreciation account? I do have different accumulated depreciation accounts based on buildings, musical instruments, office equipment, machinery and equipment, and so forth. 

Thanks in advance.  

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Best answer 10-15-2018

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Fixed assets are always at cost in the books (unless the...

Fixed assets are always at cost in the books (unless the value goes below cost).  Given that you bought below market value, the appraisal is irrelevent. So you should enter the purchase price (plus closing costs) in the books.  The other side of the entry is the long term liability and bank for the down payment and other closing payments.  Closing costs should not include current year expenses like property tax or utility settlements.   Land is not depreciable but building are, so there may be a case for one account for each.. I don't see the value of breaking it down further.  I would have a different accumulated depreciation account for each depreciation method, or maybe year, so that you can easily get the net book value of each fixed asset group (cost less acc. dep.)

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Highlighted
Established Community Backer ***

Fixed assets are always at cost in the books (unless the...

Fixed assets are always at cost in the books (unless the value goes below cost).  Given that you bought below market value, the appraisal is irrelevent. So you should enter the purchase price (plus closing costs) in the books.  The other side of the entry is the long term liability and bank for the down payment and other closing payments.  Closing costs should not include current year expenses like property tax or utility settlements.   Land is not depreciable but building are, so there may be a case for one account for each.. I don't see the value of breaking it down further.  I would have a different accumulated depreciation account for each depreciation method, or maybe year, so that you can easily get the net book value of each fixed asset group (cost less acc. dep.)

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Thank you. I have already created my Chart of Accounts an...

Thank you. I have already created my Chart of Accounts and do like the way the sub-accounts are broken down. Just to clarify, do I absolutely have to add a value to the land account for accuracy? I would not know how much to assign for each account... building, land, storage building, and shed.
Established Community Backer ***

@ ncwc Get the last years property appraisal/property tax...

@ ncwc

Get the last years property appraisal/property tax bill, that will show land value and improvement value, do the math and find the % of total property value attributable to the land.

Use that % and calculate the value of the land based upon your purchase price - post that to the land FA account, then reduce the total amount by that amount and post the answer to the fixed asset account for the building

Building, barn, storage shed can all be lumped into one fixed asset account, since their start date for depreciation is the same

I prefer my FA account to look like this (all are fixed asset type account)

address
>> land
>> building
>> >> accumulated depreciation building

Some make it even more detailed so the building shows current book value

>>building
>> >> cost
>> >> accumulated depreciation building

parent account are always summing accounts in QB


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