cancel
Showing results for 
Search instead for 
Did you mean: 
Announcements
Get unlimited expert tax help and powerful accounting in one place. Check out QuickBooks Online + Live Expert Tax.
toshacolephoto
Level 2

Land Contract

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.

Solved
Best answer September 26, 2022

Best Answers
Rainflurry
Level 14

Land Contract

@toshacolephoto 

 

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:

 

 DebitCredit
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. 

View solution in original post

4 Comments 4
Rainflurry
Level 14

Land Contract

@toshacolephoto 

 

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:

 

 DebitCredit
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. 

toshacolephoto
Level 2

Land Contract

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!

toshacolephoto
Level 2

Land Contract

This worked perfectly! Thanks again!

FritzF
Moderator

Land Contract

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.

Log in today
Get expert help and peer support to tackle all your QuickBooks questions effortlessly.

Need to get in touch?

Contact us