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

Sold home on which home loan is taken. 

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

What will be entry in book?

Replies (6)
Quick Summary
This discussion explains the accounting entries required when selling a house that has an outstanding home loan. It details how to record the sale of the asset, the repayment of the loan (both the portion paid by the seller and the remaining part assumed by the buyer), and how to account for any profit or loss on the sale, including depreciation.

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.

Gain on sales will be credited to capital ac?

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 ) 

 

 

 

 

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

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