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Starting Quickbooks Online for flipping
I have degrees in Accounting and understand it but have never used it in real estate nor have I used much Quickbooks. My husband flips houses and has about 5 going at any time. We just set up Quickbooks Online which I've never used before. I've done some searching online but haven't found exactly what I'm looking for. So far I'm leaning towards setting up each property as a class. What I don't know how to do is set it up for the initial purchase and then for the sale. I haven't set up much yet except adding each house as a class. Can anyone offer advice on how to initially track buying the house and then how to put it in Quickbooks once it's sold?
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Originally posted by @Account Closed:
I would set up a separate quickbooks for every entity under your control. Once tax season comes around it will be difficult to prepare tax returns when all entities are lumped together. Just makes it easier when they stand alone.
For initial purchases, you have to separate the land and property value as the property can be depreciated and the land cannot. If you are using financing, you can capitalize the loan costs and amortize it over the life of the loan. Closing costs get a little trickier because some costs can be capitalized and others must be expensed depending on what makes up your closing costs.
When you sell the house the taxable gain will be the difference between the selling price and the depreciated value of the home. Generally closing costs are expensed at selling point.
I know this is a little late- but for everyone's reference. This comment is all kinds of wrong information.
Using classes to track your separate flips is a great idea- this is how I set it up In QBO.
You do not separate land/building or depreciate at all for flips. I can not reiterate this enough. You capitalize ALL EXPENSES related to the flip to the balance sheet. I normally sort these into "purchase price, renovation costs, holding costs" ect....then. As long as your mapping is correct all expenses go to the balance sheet...and as long a you always enter a class you can pull a Balance Sheet for each individual project as well.
When the project sells you do an adjustment to record the sale and at that point...all profit/losses move to the P&L.
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