Overview

The property purchase generally takes up two steps. The first step to record the deposit (Contract date), with the subsequent settlement recorded at a later (settlement) date.

The below example is designed to assist in the process of recording a property purchase in Simple Fund 360. This example also incorporates a loan liability due to the limited recourse borrowing arrangement entered into by the trustees of the SMSF to purchase the property.

Sample Settlement Statement

Property: 123 Fake Street, Toorak, Victoria, 3142

Contract Date: 01/08/2014

Settlement Date: 23/09/2014

In addition to the deposit of $100,000 and the settlement of $399,903.27 the following expenses were also paid:

• Legal fees $1,000 (capitalised when recording settlement)
• Stamp Duty $22,000 (capitalised when recording settlement)
• Pest inspection expense $750

This purchase of a property was under a Limited Recourse Borrowing Arrangement (LRBA) with a loan of $200,000 recognised on the 10/09/2014.

How to Process

Create Accounts

1. From the Chart of Accounts, click Add Account, now select Investment from the drop down list.  
   
   
   
2. Select the Investment Type as Real Estate Properties (Australian - Residential). 
   
   
3. From the Select Securities drop down, select Create New. 
   
   

4. From the New Security screen, input unique Security Code (IP-001) and Security Name (123 FAKE STREET, TOORAK).

5. Input the Security Details. 

   Details	Explanation
   Data Feed Source	This field will display Manual.
   Market Type	Select from the drop down list the Market Type of the security. For this property we will select Unlisted and Direct Property.

6. Select the Prices tab to input the price history for the investment.
7. Select Add Price and input the Date as 01/08/2014. Now enter the Net Asset Value of $499,903.27 and select Add.
   
   

8. Select Save to add the security to the list.

9. From the Select Securities drop down select IP-001.

   
   

    

10. Select More Details >> and then select the checkbox Asset subject to Limited Recourse Borrowing Arrangements. This will create the associated linked loan account 85500. 

     

11. Select . Account 77200/IP-001 will now be added to the fund's Chart of Accounts.

Record Deposit

From the Main Toolbar, go to Accounting.
Select Transaction list
Select New Transaction.
Select Bank Statement.

From the Transaction List record the $100,000.00 deposit paid from the ANZ account.

Date	Input 01/08/2014.
Reference	Input 4.
Description	Input Deposit for property.
Input bank Account	Select 60400/BANKCODE.
Input Account	Select account 77200/IP-001.
Units	Input 1 unit for the purchase.
Amount	Input a debit amount of $100,000.00.
More details	Click to input the Settlement Date.
Settlement Date	Input 23/09/2014.

Select Post to save the transaction.

Loan Recognition

From the Main Toolbar, go to Accounting.
Select Transaction list
Select New Transaction.
Select Bank Statement.

From the Transaction List record the $200,000.00 loan recognition to the ANZ account.

Select Post to save the transaction.

Record Settlement

From the Main Toolbar, go to Accounting.
Select Transaction list
Select New Transaction.
Select Bank Statement.

From the Transaction List record the Settlement amount of $399,903.27.

Date	Input 23/09/2014.
Reference	Input 5.
Description	Input Settlement for the property.
Input bank Account	Select 60400/BANKCODE.
Select an account	Select Account 77200/IP-001.
Units	Input 0 units (0 units will trigger a cost base adjustment).
Amount	Input a debit amount of $399,903.27.
More details	Click to select a parcel.
Select parcel	Click Select Parcel and tick the check box for the deposit which was made on 01/08/2014.

Record Stamp Duty, Legal Fees, Expenses

Two options:

A) If the amounts are capitalised, record them as a cost base adjustment to the property account (see prior tab for example of recording cost base adjustment);

B) If they are expense transactions, record a Bank Statement entry using account 42080 (Stamp Duty), 42030 (Legal Fees) and 42040 (Pest Control). Refer to Transaction Input or Smart Matching (if using a bank data feed) for more.

See Also

• Limited Recourse Borrowing Arrangements (LRBA)
• Transaction Input and Smart Matching for future loan repayments
• Transfer Real Estate Asset from Residential to Non Residential
• Rental Properties