Quicken & Other Budget/Accounting Software/How to Record an Accounting Entry from HUD-1 Statement
I just recently purchased a commercial building and on the HUD-1 Settlement Statement I received there is a settlement charge for prorated real estate taxes from 1/1/12 to 10/24/12 for $8,091.84. It is classified as a credit on the HUD Statment. How do I record this on the journal entry in Quickbooks? As a debit to real estate tax expense or credit to building & improvements or some other type of entry? Thanks for your assistance.
That will depend on which line the RE tax appears on the Hud Statement
If it shows up on line 106 through line 112, that means you had to reimburse
RE tax to the seller for taxes prepaid by the seller. That amount posts
directly to Real estate Tax expense.
If the tax shows up on the Hud Statement on line 210 through 219;
that means the Seller did not pay the tax so you will have to pay it,
When you see an amount here, its purpose is that you don't
pay full price for the property because you will be using those funds to pay
expenses on behalf of the seller. That amount posts directly to the acquisition
cost of the building (debit Building and credit RE tax expense - When you pay the
RE tax you will post to the RE Tax expense account, so the net RE tax expense
represents your cost of RE tax for the time you owned it.
So your total acquisition cost will be all deposits money + amounts paid at closing + Mortgage
Total cost + adjustments for items unpaid by the seller is allocated to:
Escrow (an other current asset# that the bank may have assessed at closing
Real estate tax expense #Positive amount if on lines 106-112#
Real estate tax expenses #negative amount if on lines 210-219)
The remaining is allocated between
See a copy of your last tax assessment to see what % is assessed to land vs building.
Hope this helps
Linda Saltz , CPA
Advanced Certified QuickBooks Advisor
We sell and support QuickBooks Enterprise