@Valley_Wealth
I hope you took the tax liability created by the depreciation recapture into account. Depending on the value of the building and the amount of depreciation taken, it can be significant and must be reported in the year of the sale.
You can just write a check in QB for the closing costs.
This is an installment sale so, immediately after closing, you will create a journal entry to record the installment note (seller financing), close out the accumulated depreciation account, remove the building from your assets, book the income on depreciation recapture, and record the deferred gain of the installment sale:
| | Debit | Credit |
| Accumulated Depreciation (to close the account) | XXX | |
| Installment Receivable (seller financing) | XXX | |
| Building (at original cost) | | XXX |
| Gain on depreciation recapture (equals accumulated depreciation) | | XXX |
| Deferred gain (to balance) | | XXX |
When you receive payments from the buyer, assign the Installment Receivable account to the deposit for the principal amount and interest income for the interest amount.
Then, create a journal entry:
| | Debit | Credit |
| Deferred gain (principal amount) | XXX | |
| Gain on sale | | XXX |
This journal entry books the gain on the sale as payments are received and reduces the deferred gain.
