Level 1

Real estates set up

I would like to know how to set up a real estate property I bought in quick books.

I saw that a lot of people are saying thatI need one Asset account and a sub-account asset account.

can someone explain why.

thanks!

Solved
Level 6

Employees and payroll

Setup depends on who you are and what you have. If you own one rental property, you can make your tenants a customers.  If you own several properties, you can use classes to separate the properties and run separate profit and loss reports for each property.  Tenants can still be your customers.  You would classify each transaction.

If you are a property management firm, you would use the sub-customers.  If you don't have the class feature, you can use sub accts.   But it tends to make the chart of accts very large and cumbersome.
Level 1

Employees and payroll

my question is how to set it up as an asset?
Level 1

Employees and payroll

What kind of company do you set up - real estate? rental company?  something else?
Level 1

Employees and payroll

real estate
Level 15

Employees and payroll

"how to set it up as an asset?"

"I saw that a lot of people are saying thatI need one Asset account and a sub-account asset account.

can someone explain why."

Property is a Fixed Asset and it helps to give yourself Clarity. Like This:

123 Easy Street <== Parent level account, do not use

Subaccount: Basis Buildings <== Cost here, split off Land

Subaccount: Improvements <== not ongoing Repairs and Maintenance, but Improvements after purchase

Subaccount: Depreciation

Subaccount: Land <== Land never depreciates




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Level 1

Employees and payroll

Question?

Under improvements, would you then create sub-accounts for those improvements (i.e., installation of new driveway, new roof, new fencing, etc. ) as some of these items are capital improvements and may be depreciated?  Also, what about appliances?  

 

Thanks.

Level 2

Employees and payroll

The purpose of the Asset account is to track the real estate basis value, for depreciation purposes (as well as resale). So I would only put improvements in the Asset account that increase the basis value of the property which will then effect the depreciation schedule.

 

The treatment of appliances is a matter of preference. I would consider the purchase of the property including all appliances as part of the basis and depreciate the property. If you wanted to get more complicated, you can split off the appliances as their own assets, and lower the basis of the property accordingly. This will lower the basis of the property, which might increase capital gains taxes at resale. The benefit would be deducting the cost of the appliances as a write off the first year, since the appliances would be below the cap limit for fixed assets (typically $2500 ea).    

 

 

 

Anonymous
Not applicable

Employees and payroll

AJ I saw your comment for RE Investment for Quickbooks on another post. Are you a bookkeeper?  Interested in discussing more about it. Email me at [email address removed]

Level 2

Employees and payroll

Hi,

 

Thanks for the compliment, but I'm a business owner, and learned (learning) accounting as I go. 

I'll get in touch with you. 

 

What I learned this year about quickbooks is to setup quickbook accounts according to the tax form categories. Or better yet, MAKE SURE TO SET THE APPROPRIATE TAX LINE in the QB Accounts you setup. 
Otherwise, the QB import into TurboTax will be a rough process! 

 

Level 2

Employees and payroll

Hi Anonymous. QB removes email addresses from posts, so I won't be able to email you. I'm not sure how members of the QB Community can contact each other - might want to ask Intuit about that! 


@Anonymous wrote:

AJ I saw your comment for RE Investment for Quickbooks on another post. Are you a bookkeeper?  Interested in discussing more about it. Email me at [email address removed]



 

Level 2

Employees and payroll

After some thought, I need to correct my answer above. 

Appliances should NOT be considered as part of the Building Asset. Real Estate depreciates at a rate of
27-1/2 years. Expensive appliances depreciate at a rate of 7 years. So the two assets need to be depreciated at different amounts per year. 

 

As far as whether appliances (and other small capital expenditures) are "assets" or "expenses" depends on the agreement of the members of the company, or just you if you are a sole owner. Each capital purchase (appliances, furniture, tools, etc) are treated individually for depreciation purposes, NOT as an accumulated sum over the year. Some owners will expense (write off) purchases up to $1000, some owners will expense items up to $5000 or more. The IRS guidelines are very vague as to what constitutes an expense-able purchase. $2500 seems to be a common figure.