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My business is in a land contract for 5 years on the building my business is currently in. I will pay monthly on this building for the next 5 years and after that, I will pay off the remaining balance to purchase the building outright. Is there a way I can record how much the building costs and how much I have paid down on it to keep track of what I owe at the end of the 5 years? I intend to make higher payments each month than are required since I am not paying interest on this land contract.
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Create a Fixed Asset account called "123 Main St." or something similar as well as a liability account called "Land Contract - 123 Main St". Then, create a journal entry. Presumably, you made a down payment, so the journal entry would look like this:
Debit | Credit | |
Fixed Asset - 123 Main St. (full purchase price) | XXX | |
Bank Account (down payment) | XXX | |
Land Contract - 123 Main St. (contract amount) | XXX |
When you make payments, assign the Land Contract liability account to the check/expense and the contract balance will be reduced by the amount of your payments. This will always keep the liability account accurate as to your balance outstanding.
As a side note, if you don't have a CPA, make sure you contact one regarding depreciation on the building. Depreciation on a land contract is not straightforward in terms of whether you can take the depreciation or the legal owner of the property can take it. Only one of you can take it.
Create a Fixed Asset account called "123 Main St." or something similar as well as a liability account called "Land Contract - 123 Main St". Then, create a journal entry. Presumably, you made a down payment, so the journal entry would look like this:
Debit | Credit | |
Fixed Asset - 123 Main St. (full purchase price) | XXX | |
Bank Account (down payment) | XXX | |
Land Contract - 123 Main St. (contract amount) | XXX |
When you make payments, assign the Land Contract liability account to the check/expense and the contract balance will be reduced by the amount of your payments. This will always keep the liability account accurate as to your balance outstanding.
As a side note, if you don't have a CPA, make sure you contact one regarding depreciation on the building. Depreciation on a land contract is not straightforward in terms of whether you can take the depreciation or the legal owner of the property can take it. Only one of you can take it.
Thank you so much! I will work on this tomorrow. I do have a CPA, specifically, so I will make sure to ask her about this information. Thanks again!
This worked perfectly! Thanks again!
Hello again, Rainflurry.
I appreciate you for always sharing your knowledge about QuickBooks. This will definitely help other users as well in the future. Please keep on posting here in the Community.
Keep safe and have a great rest of the day.
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