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To record the purchase of a property using a mortgage in Sage Accounts

Created on  | Last modified on 

Summary

If your company purchases a property and finances this with a mortgage you can record this in Sage Accounts.

Resolution

Create the new nominal codes

If you already have these nominal codes then please proceed to the following section To record the purchase and costs .

If you're using the default nominal ledger structure we suggest you use the following nominal codes:

N/C Name Report Report section
0010 or 0011 Freehold Property or Leasehold Property Balance Sheet Fixed Assets
2201 Purchase Tax Control Account Balance Sheet Current Liabilities
2330 Mortgages Balance Sheet Long Term Liabilities
1200 Current Bank Account Balance Sheet Current Assets and Current Liabilities
7603 Professional Fees Profit and Loss Overheads
7607 Stamp duty Profit and Loss Overheads
7903 Loan Interest Paid Profit and Loss Overheads

  1. Click Nominal codes and click New/edit.
  2. Complete the Nominal Record as follows:

    N/C Enter the nominal code number you want to create, for example, 7903.
    Name Enter the name of the nominal code, for example, Loan Interest Paid.
  3. Click Save and click Close.

    If required, to create further nominal codes, repeat this process.
Record the purchase and costs
Example

Your company buys a new property for £/€200,000. This figure also includes a mortgage arrangement fee of £/€500, stamp duty of £/€1500 and a deposit of £/€10,000.

  1. Click Nominal codes then click Journal entry.
  2. Enter a reference and date and the relevant information for the journal on the Nominal Ledger Journals window, for example:


    N/C
    Name
    Dept
    Details
    T/C
    Debit
    Credit
    0010 or 0011 Freehold Property or leasehold Property Department Purchase cost of new property T2 198,000  
    In this example the property is exempt from VAT. It's possible for VAT to be charged on the purchase of a property. For more information about
    the rules regarding property and option to tax, please refer to HMRC: http://www.hmrc.gov.uk
    7603 Professional Fees Department Mortgage arrangement / setup fees T2 500  
    7607 Stamp duty Department Stamp duty T2 1500  
    2330 Mortgages Department Outstanding mortgage balance after purchase T2   200,000
    The following entries represent the value of the deposit made and reduces
    the amount that shows against the Mortgages nominal code.
    2330 Mortgages Department Deposit paid from bank T9 10,000  
    1200 Bank Account Department Deposit paid from bank T9   10,000


    This journal records the purchase of the new property, the administration fees and the deposit paid towards the new property.

  3. Click Save and click Close.

You've now recorded the purchase figures for your new property, including arrangement fees. When you're ready to post the monthly payments for the mortgage, please refer to the following section.

Post the monthly repayments
  1. Click Bank accounts then click Bank payment and enter the relevant information into the Bank Payments window.

    For example:
    Bank Date Ref N/C Details Net T/C Tax
    1200 Date paid Ref 2330 Mortgage repayment xxx.xx T9 0.00
    1200 Date paid Ref 7903 Loan interest paid xxx.xx T9 0.00
  2. Click Save and click Close.

The split between the amount of the payment that reduces the outstanding balance and the amount of the payment that's classed as interest will depend on the type of mortgage taken out. To determine the values you should consult your mortgage lender.

 

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