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.
Note
BGL do not provide accounting or taxation advice. The following is designed to act as a guide for Simple Fund 360 users. It is not designed to be accounting or tax advice and should not be taken as a strict guideline. Other methods that are more suitable may be used instead of these steps.
Sample Settlement Statement
Property: 123 Fake Street, Toorak, Victoria, 3142
Contract Date: 01/08/2013
Settlement Date: 30/09/2023
| DR | CR | |
|---|---|---|
| Contract Price | 500,000.00 | |
| Deposit | 100,000.00 | |
| Stamp duty On transfer | 45,000.00 | |
| Registration Fee | 150.00 | |
| Costs & Disbursements (see attached Tax Invoice) | 1,800.00 | |
| Adjustments | ||
|
Council Rates $400 Quarterly Paid to 23/09/2024. 7 days remaining for Q1 |
50.00 |
|
|
Water Access and Drainage $300 Quarterly Paid to 23/09/2024. 7 days remaining for Q1.
|
85.00 | |
| Balance due to Vendor | 447,085.00 | |
| E & OE | 547,085.00 | 547,085.00 |
How to Process
| Steps (click each tab) |
|---|
|
1. Create Accounts |
| 2. Record Deposit |
| 3. Loan Recognition |
| 4. Record Settlement |
Create Accounts
| From the Main Toolbar, go to Accounting. |
|
| Select Chart of accounts from the list. |
|
- From the Chart of Accounts, click Add Account, now select Investment from the drop down list.
-
Select the Investment Type as Real Estate Properties (Australian - Residential).
-
From the Select Securities drop down, select Create New.
-
From the New Security screen, input unique Security Code (IP-001) and Security Name (e.g. 123 FAKE STREET, TOORAK).
-
Input the Security Details.
DetailsExplanationData 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. - Select the Prices tab to input the price history for the investment.
- Select Add Price and input the Date as 01/08/2014. Now enter the Net Asset Value of $499,903.27 and select Add.
-
Select Save to add the security to the list.
-
From the Select Securities drop down, select IP-001.
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Select More Details >> and then select the checkbox Asset subject to Limited Recourse Borrowing Arrangements. This will create the associated, linked loan account 85500.
-
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 Bank account.
| Date | Input 01/08/2023. |
| 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 30/09/2023 |
Select Post to save the transaction.
In this example, the cheque date and contract date are the same. In some instances, the cheque may clear to the bank on a separate day from the contract date. If that is the case, record the transaction on the clearing date and record the contract date in the More Details panel. Simple Fund 360 uses the contract date when calculating CGT on disposal.
.
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 transactio. In this case, the net settlement amount of 447,085.00 is paid via $200,000 cash and $247,085.00 from a Loan (LRBA)
- Disbursements which are expensed will be allocated to the relevant expense account
- To be capitalised and not expensed, disbursements need to have 0 units entered to adjust the cost base.
| Account Name | Account Code | Units | DR ($) | CR ($) |
| Bank | 77200/Property | 0 | $446,955 | |
| Council Rates | 41960/Property | N/A | $50 | |
| Water Rates | 42150/Property | N/A | $80 | |
| LRBA | 85500/Property | N/A | $247,085 | |
| Bank | 60400/Bank | N/A | $200,000 |