Option to purchase a property in QuickBooks

purchase a property in QuickBooks

Q: As the lessor: how do I account for an option to purchase a property in QuickBooks?

A: Here’s the option to purchase a property in QuickBooks. The buyer or lessee puts down money to purchase the option to buy the property later. The buyer and seller may agree to a purchase price when putting the money down or evaluate the market value at that time. Oftentimes, buyers prefer to lock in the price. The term is negotiable and no one can purchase the property in that period. Even if the buyer does not buy the property, the option to purchase is typically not refundable. A portion of the monthly rental property payment is applied toward the purchase price.

In QuickBooks, I would create a liability account for the option to purchase. Receive payments against that account.

 

Gita Faust

About the Author

Gita Faust has over 30 years of accounting experience in the real estate and property management industry, Gita Faust is more than just a real estate investor; she is also popular for her work as an accountant, consultant, mentor, speaker, QuickBooks Top ProAdvisor, QuickBooks Solution Provider, member of Intuit’s Trainer/Writer Network, and, of course, author. Gita is well-known for her exemplary leadership and advisory skills. In fact, she even helped pioneer the adaptation of QuickBooks to suit the needs of professionals in real estate and property management. To share her knowledge she has written a series of courses titled Simplified Accounting Solution, which provides step-by-step guidance for those working with QuickBooks.

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