How to account for building a house

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Ok, using Reckon Personal Accounts.   How would most account for going through the process of building a house?

We bought land and the land is an Asset Account, so far, so good.

We are about to contract a builder to build our house on the land.   What is the best way to account for all the payments?

Here is my thought process.   At the end of the build, there will be a house and land Asset account.   During the course of the build I'm thinking of creating an Asset account, name it in the builders name, and all payments to the builder at various stages, (Plans, Slab, Framing, etc.) to be transferred into the Asset Account in the builders name.   At the end of the process that Asset should be transferred into the Land Asset Account and that should equate to the value of the existing house and land, then, of course, adding appreciation or depreciation to correctly reflect the value.

My question is, is there another way to do this?
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Posted 1 year ago

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David Hunt

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That would work. However no reason why you can't enter all these payments direct in your assets account. I have one single asset account called Residential Property. Each transaction I place in there has a tag for that property. If you have more than one property or asset and you run a register report subtotalled by tag it will show the value of each one. Note that it's not just a build that will go into that account. It could be minor improvements, for example after we reno'd our place I purchase sun awnings for the entire back deck. For me this is a capital improvement to the house and I transferred it to the Residential Property for $5000 using that tag the house I live in. ie this purchase goes to the cost base of my home asset. David
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Diver Dave

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St, there are many ways to achieve an end in RPP which is one of its strengths.  Presumably you will pay the builder through a cheque or savings account so you will want to be able to reconcile that account.  With a building projects I guess you'll have a large number of categories and sub categories.  If you want to also track the amount spent on the project in an Asset file, then I'd suggest using a split transaction for each payment made.  In the account from which payment is made would be pay  Builder  $1,000 (or as many sub categories as the Bill is for), un-categorised -$1,000, Transfer to Building Asset $1,000.

That way you can run a report on the Project costs by category and maintain an Asset register of the total amount spent on the project.

Hope that's clear, but come back with any questions.

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Thanks for the replies, appreciated.