Non rental Property
We buy properties at tax sales and need to track them, Most are vacant land and are really not ours until redemption period runs out. I have figured out our rental property entries. But I see no where to track non rental property with their associated costs.
Example:
Buy property at tax sale for $100.00,
In order to redeem the property from us, there is a 5% penalty and 1% per month interest. The value of the property is the initial purchase price plus 5% plus 1% per month from date of the tax sale. After the redemption period is over it is fair market value or whatever price we set. There is other expenses that can be included in the redemption price like mowing.
Where do I enter this property to track when it is not a rental property? I do not have to track the penalty and interest as it will be calculated at time of redemption by the tax collector, although it is an asset. I do need to track any and all other expenses though and the sale or redemption of the property.
Thanks
Best Answer
-
I guess one way of doing this is to simply create a generic "asset" Account for each property and put that $100.00 in there at the Buy. If the 5% and the 1% are "fixed" - not being calculated on an ever-increasing balance - you could create a Reminder to make those entries for you each month. Those other expenses that can be included in the redemption would also be posted there.
Once the redemption period is past and the property is yours, additional costs could continue to be capitalized in the Account, but I wouldn't simply change the value of the Account because you never really know its value until you sell it. The difference between the dollars received in the sale vs. the capitalized costs is your gain or loss on sale.
1
Answers
-
I guess one way of doing this is to simply create a generic "asset" Account for each property and put that $100.00 in there at the Buy. If the 5% and the 1% are "fixed" - not being calculated on an ever-increasing balance - you could create a Reminder to make those entries for you each month. Those other expenses that can be included in the redemption would also be posted there.
Once the redemption period is past and the property is yours, additional costs could continue to be capitalized in the Account, but I wouldn't simply change the value of the Account because you never really know its value until you sell it. The difference between the dollars received in the sale vs. the capitalized costs is your gain or loss on sale.
1