This article will guide you through how to process a property purchase for both Residential and Commercial Purchases. This article consists of the following;

• Residential Purchase Deposit
• Residential Purchase Settlement
• Commercial Purchase Deposit
• Commercial Purchase Settlement

Residential Purchase Deposit

A typical property purchase involves two transactions, the first being the Deposit and the second being Settlement. You will need to split the Property Purchase into two events, to replicate the actual process. 

Deposit event takes up an accrual of the full property purchase and the Property Purchase Settlement event clears this accrual and allows the user to enter any additional disbursements that relate to the property purchase.

Navigate to Fund Level > Transactions > Investment - Buy > Property Purchase Deposit

1. Select the Property Account that is being purchased

   If the property isn't set up, then click the 'Create Property Account' link and enter Code, property Description and Save

2. Enter the Contract Date and Deposit amount 
3. Enter Remaining Amount (Contract Amount less the Deposit Amount paid)
   

   If there was no deposit received the deposit amount should be nil and the remaining amount should be the total contract amount

4. Enter a Description (This is a free text field, and you can change the default description)
   
   
   
   
5. Click the Submit button to process the deposit

Residential Purchase Settlement

Once you have processed the Property Purchase Deposit you can then process the property settlement.

Navigate to Fund Level > Transactions > Investment - Buy > Property Purchase Settlement

1. Select the Property Account that is being purchased
2. Enter Settlement Date
3. Contract Date will prefill from the date in the deposit event
4. Remaining Amount - The contract amount less the deposit amount already paid. This prefills from the deposit event. The amount cannot be edited in this event and is not inclusive of any disbursements paid on settlement.
5. The Based on Purchase Price of amount will prefill from the deposit event (Full contract price e.g. $500,000)
6. Enter GST if required

   GST field is not relevant to your Residential Property if your entity is not registered for GST so you can choose to leave this at $0.00

7. Enter a Description (This is a free text field, and you can change the default description)
8. Click Add to add the "Disbursements"
9. Select property expense Type, enter Amount, GST (if Applicable) 
   

   If the client receives reimbursements from vendor, enter the Amount as negative balance, you can choose to Capitalise or Expense those items. In our example, "stamp duty, legal and seller's release fees" have been capitalised

10. Click Submit to process the settlement

Commercial Purchase Deposit

A typical property purchase involves two transactions, the first being the Deposit and the second being Settlement. You will need to split the Property Purchase into two events, to replicate the actual process. 

Deposit event takes up an accrual of the full property purchase and the Property Purchase Settlement event clears this accrual and allows the user to enter any additional disbursements that relate to the Commercial Property Purchase, that attracts GST.

Navigate to Fund Level > Transactions > Investment - Buy > Property Purchase Deposit

1. Select the Property Account that is being purchased

   If the property isn't set up, then click the 'Create Property Account' link and enter Code, property Description and Save, refer to Property Set-Up 

2. Enter Contract Date (The date as per the contract of sale, being the cost base or CGT date)
3. Enter Deposit amount (The Gross /Total Amount Deposited, including GST)
4. Enter GST in Deposit (This is the GST component of the Deposit Amount Paid)
5. Enter Total GST (Is the total GST paid to acquire the property, based on the contract price)
6. Enter Remaining Amount (Total gross amount after deducting The gross deposit amount)
7. Enter a Description (This is a free text field, and you can change the default description)
   
   
8. Click Submit to process the deposit

Commercial Purchase Settlement

Once you have processed the Commercial Purchase Deposit you can then process the property settlement.

Navigate to Fund Level > Transactions > Investment - Buy > Property Purchase Settlement

1. Select the Property Account 
2. Enter the Settlement Date
3. Contract Date will prefill from the date in the deposit event
4. Remaining Amount - The contract amount less the deposit amount already paid. This prefills from the deposit event. The amount cannot be edited in this event and is not inclusive of any disbursements paid on settlement
5. Total GST will prefill from the Deposit event (The GST component of the Gross remaining amount)
6. GST Remaining will prefill from the deposit event (The amount should be the same as GST on Settlement)
7. The Based on Purchase Price of amount will prefill from the Deposit event (This is the gross contract price including GST)
8. Enter a Description (This is a free text field, and you can change the default description)
   
9. Click Add to add "Disbursements"
10. Select expense Type, enter the Amount, GST of the disbursement

    If the client receives reimbursements from vendor, enter the Amount as negative balance, you can choose to Capitalise or Expense those items. In our example, "stamp duty, legal and seller's release fees" have been capitalised

11. Click Submit to process the settlement

What's Next?

 Learn how how to create a Depreciation Worksheet