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Account entry for sale of house on which home is taken.

shaikh sahid (31 Points)

08 February 2023

Sold home on which home loan is taken.

Half loan is paid. Reamaning will be paid by buyer?

What will be entry in book?

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prasad Nilugal ( GST Practitioner & Accounts ) (14163 Points)
Replied 08 February 2023

If Asset is in your balance sheet , and for example you sold Home to Mr A then pass the entities as follows.

1) Bank A/c Dr
To Asset ( Home)
( Being Asset sold )

2) Loan. A/c Dr
To Bank A/c Cr
( repayment of half loan)

3) Loan A/c Dr
Loan paid by A A/c Cr
( remaining loan payable by Mr A )

Loan paid by A A/c ( Byer) will be under Indirect Income profit and loss account.

3 Like

shaikh sahid (31 Points)
Replied 08 February 2023

Gain on sales will be credited to capital ac?

3 Like

prasad Nilugal ( GST Practitioner & Accounts ) (14163 Points)
Replied 09 February 2023

If the house Building is for business purpose, after deducting Depreciation ( WDV from 1st April to date of sale) balance profit will be credited to profit and Loss account. . so 1,St entry will be

Bank A/c Dr
Depreciation A/c Dr
To Asset ( Home) A/c Cr
To profit on Sale A/c Cr
( Asset sold , profit credited after Depreciation)

Profit on sale will be transfer to profit & Loss Account

profit on sale A/c Dr

To profit & Loss A/c Cr

( Profit transfer to P&L )

Depreciation will be transfer to P& L entry

Profit & Loss A/c Dr

To Depreciation A/c Cr

( Depreciation transfer entry )

3 Like

prasad Nilugal ( GST Practitioner & Accounts ) (14163 Points)
Replied 09 February 2023

2 Like

CA Rashmi Gandhi (Chartered Accountant) (86220 Points)
Replied 09 February 2023

Sale Entry

Buyer A/c (Sale value)
To House
To capital (Profit)

payment rec entry

Bank A/c (amount received in bank)
Home Loan(loan paid by buyer)
To Buyer

2 Like