Recording Off Plan Property Purchase


What would be the correct way to record a purchase of an off-plan property in QF?

The total purchase price is made up as follows:

£150,000 Property
£12500 Allocated Parking Space
£4500 Furniture Pack

To date I have made the following payments:

£5000 Reservation Deposit
£35000 First Stage Payment paid on exchange of contracts.

I am due to make a further payment of approx. £40K later this year, and the balance will eventually be made on structural completion - and will be funded by a mortgage on the property.

The property is held by a Ltd Co.

Should I just record the £5000 + £35000, total £40K against nominal code 10 (Freehold Property) so that on my companies balance sheet it will show as an asset. OR, should I record the total value of the property £150K + £12.5K = £162.5K total?

I mainly unsure because the property is not actually fully built yet. If it was a straightforward purchase of an existing property, then I would put the value of the property as an asset and then record the value of any mortgage as a liability - but as the property is not built - don’t know the best way to go about it.

Thanks in anticipation of your help.

Generically property will be capitalised on £150K + £12.5K = £162.5K total.
Further expenditure can be capital or revenue depending conditions satisfied as per HMRC guideline for tax purpose

Thank you for your response.

I’m not 100% clear on your response.

Within Quick File, should I record the total value of the property £162.5K as an asset (even though it has not yet been built yet) OR should I just record the money paid thus far, e.g. £5K deposit and £35K 1st stage payment, and then continue to record further stage payments against the nominal code 10 (freehold property)?

If I record the full value of the property, then within QF - what is the best way to record capital payments made towards the purchase cost (e.g. deposit and stage payments)?

If 162.5k is initial purchase cost then you need to book invoice for it and tag deposits and further down payments to respective supplier. Interest element on payments need to go into P&L, Further development cost need to be split as repairs or capital according to nature of costs

OK so if I understand you correctly.

  1. Raise a purchase from the builder for the full value of the property £162.5K
  2. Allocate the £5K (deposit) + £35K (first stage payment) against this purchase made in step 1.

This will see the entire value of the asset £162.5K appear on my balance sheet as a fixed asset (Freehold Property)

Under liabilities on the balance sheet - there will be a liability for the balance outstanding on the purchase raised on step 1.

Assets minus liabilities will be a negative number as I owe the difference between the cost of the fixed asset and what I have paid so for.

I think I’ve got my head around it now.

Many thanks for your valued contribution and patience with me on this.

You are on right track