Quickbooks Chart of Accounts and Item List

[Diana Gay]

I'm new to flipping houses.  Anyone have a Chart of Accounts and Items List they could share that would be helpful in setting up QuickBooks?

[Phil Bottfeld]

Hi Diana,

Not sure if you've read all the posts above. But if you're flipping here's some of the common general ledger accounts you will need.

Revenue:

Rental Income (in case your rent it before you flip)

Sale Income (sales price when you sell it)

Expenses:

RET (Real Estate tax expense)

Insurance Expense

HOA Expense (if applicable)

Interest Expense (if applicable)

Depreciation expense (if carried over multiple years)

Assets 

Fixed Asset - Building/home/condo (whatever you purchase), this should include all the costs associated with the purchase

For your rehab, anything that essentially increase the value of the property should also be capitalized as a separate fixed asset (i.e. new stainless steel refrigerator, tile, new vanity etc) Inform your CPA as each will have different depreciable lives per MACRS, and this will be important if you carry for your flip over two different tax years. All the labor associated to these types of assets can also be capitalized.

Cash - Assuming you have put some cash into a back account separately to fund your business

Liabilities-

Debt/ mortgage you may have taken on to purchase the asset

Anything your purchase that essentially does not increase the value of your home can be expensed in the year in which it was paid. You can carry your loss (NOL) from year to year but I know a limit does exist so be sure to check with your tax preparer.

I highly recommend that if you are getting into flips (and you are doing more than just one every here and there) and want your taxes to be correct, I recommend sitting down with your accountant. Better to be right the first time and for the IRS to probe you. Not saying that will happen, but its easier to be right on the front end.

Also, if you're flipping frequently, I highly recommend discussing the rules of a 1031 exchange and this can be a great tool to deferring taxes on gains associated to real estate.

While I do go on record that I am a CPA, I do not specialize in real estate tax transactions as my background is audit (not tax), it's important you speak with a real estate tax accountant to ensure your best interest are met.

I hope this was helpful, there are plenty more GL accounts to include and PM me if you have more questions. I am happy to share my quickbooks chart of accounts with you (mind you my purchases have only been buy and hold but most accounts should work for both types of REI).

kind regards,

Phil Bottfeld