How to Use QuickBooks Online to Record a HUD 1 Final Settlement Statement

[@juannegrete4029]

You are amazing I was struggling and stressing so much in my work because I couldn’t understand this I’m an accounting intern with only taking two accounting classes so you helped immensely

[@nerdenterprises]

Thank you so much! I am so glad this helped!

[@christinpriceeacpb6443]

You mentioned that you would make the checklist available for download. Where is that check list available at?

[@denisesnapology3296]

Thank you! This is great!

[@ianderama8017]

Great info thank you for this! btw, how do you add them so fast just by looking at the numbers? unless it's an excel.

[@nerdenterprises]

Hey thanks! Not sure what you mean about adding them fast? I key the numbers in from the HUD-1 and you can use your arrow keys to quickly navigate between numeric fields in QBO. So that's how I advance quickly to the next or previous line (with the up and down arrows).

[@BeulahMullins-h1n]

Thank you for this video it really helped me. I am a student. I have a question on the Hud Paid for by seller how do I journal commissions paid by seller. Would it go under misc. expense and offset with Accumulation Depr.? thank for any advise you can give.

[@edenpagani1243]

Thank you I have I client that has 35 huds on 1 year. Thank you for the GJE. Do you teach QB? I'm doing this in Excel. Yikes!

[@thetaxadvisors7382]

Great video! It was extremely helpful to see your approach and hear your thought process. A few quick technical question... Is their a reason the fees / costs associated with the loan are not capitalized and amortized over the loan's life? It looks like you are taking these costs directly to expense. Also, should the title / recording fees adjust the asset's basis? It looks like these fees are also being recorded as expenses. I am using IRS pub 527 (Residential Rental Property) as guidance. You mentioned that the property is being treated as inventory not investment property. Is that the reason behind taking these costs as an expense when incurred? If the property is treated as inventory, I was under the impression that the uniform capitalize rules would require direct costs (i.e. materials, labor, direct carrying costs, etc.) and a portion of indirect costs (i.e. administrative costs like business insurance, rent, repairs, taxes, utilities, interest, etc.) to be capitalized until the property is placed into service (IRS Pub 551, 535 & 538). Once placed into service, the costs would be picked up through depreciation. Thank you again for taking the time to make make this video and addressing these questions / comments. PostScript Starting in 2018 I believe the latest IRS guidance noted that business with $25 million or less in average gross receipts for the proceeding three years are now exempt from the uniform capitalization rules. If this is true, would it now be appropriate to expense the loan and other settlement costs as incurred or should the loan costs still be amortized and only the settlement costs expensed? I would appreciate your thoughts regarding a tax/accounting position in the unlikely case there was an audit (i.e. materiality, industry best practice, specific tax/accounting guidance, etc.) Finally, it was not clear if you were using a Closing Disclosure (CD) Statement or HUD-1 Settlement Statement & TILA (Truth-in-Lending Act) document. I think the HUD-1 & TILA were replaced by the CD in October of 2015. The CD and HUD-1 are similar in nature but I think sections and the line numbers are a bit different. If you were using a HUD-1, is there anything pertinent on the CD that you would like to highlight?

[@nerdenterprises]

Hi! Thanks for the very detailed comment! You are correct. A lot of the costs could be capitalized. Same process as the video shows, just a different account / type that you would use to record these. It's true that the form used is supposed to be the Closing Disclosure. Not much difference. Same information, just laid out a bit differently. Amazingly many title companies are still using the old form. I guess they missed the memo.

[@m.kay0106]

I just started doing bookkeeping for a land developer. Do you have a video explaining how to record a shareholder contribution taken from one of his LLCs and deposited into another one of his LLCs?

[@nerdenterprises]

Hi! I would treat each one separately. In LLC 1 he records a distribution to himself. In LLC 2 he records a contribution from himself.

[@graceh3701]

Hi Seth, Thanks for the HUD 1 help. How would I go about recording a HUD Real Estate Sale of the same property in Quickbooks? For example, we purchased the property through a hard money lender, I inputted the journal entry for the purchase settlement statement. Now I need to have my balance sheet show the sale of that same property. I work in home flips. Help!

[@sanjayvideo01]

Thanks for Nice video. Do you have similar for showing when you are selling and balancing out loan, fixed assets

[@jamesw.harrellii7298]

nerdenterprises.com/use-quickbooks-online-record-hud-1-final-settlement-statement/

[@keshadiaz886]

How do you go about showing the sale of this property?

[@nerdenterprises]

That side of it is a little more complex. Something I generally reserve for 1:1 support, because you have to zero out the assets related to the property (eg) Land, Building, and improvements. Then you have to recapture depreciation, and of course figure the gain / loss on sale.

[@ellaloyola4110]

can i have the checklist?

[@nerdenterprises]

Hey I looked around for it, but it's been so long (apparently) that I can't seem to track it down. I'll keep digging, It has to be in my files somewhere. It's just not where I would normally put it now.

[@NOREALESTATEINVESTORLEFTBEHIND]

great explanation on the HUD1, quick question where would the assignment fee be added on the HUD1.

[@nerdenterprises]

Hi! That would most likely be under loan fees, or settlement fees.

[@jbmflooring407]

Thanks for the info. Do you have a video showing the steps for entering a HUD 1 that is a financed construction loan?

[@nerdenterprises]

Hi, sorry I don't have that specifically, but a construction loan normally happens after the purchase. If you drew anything down in escrow, then there would be a credit for the amount borrowed. I can help you with construction loans in a 1:1 - new.nerdenterprises.com/consulting

[@sanjayvideo01]

where is checklist document located RestoraHouse one ?

[@nerdenterprises]

Hi. See link in the description above.

[@lauralightlerealtor]

Thank you for this video, it was very helpful! If you pay cash for the property and do not have a loan, what account would you put for the purchase price (or cash due at closing) in the journal entry for the HUD1? Then would you write a check to the attorney's office to show the transaction?

[@nerdenterprises]

Two different things. The purchase price, is still the purchase price, regardless of how you paid for it. That part doesn't change. If the amount due at closing was paid in cash, then it's a credit to owner / shareholder / member contributions. You've effectively contributed money into the business by paying cash.

[@lauralightlerealtor]

So do I need to create an expense account called "Member Contributions" for this? Or do I use the existing equity account called Members Equity?

[@nerdenterprises]

Laura Lightle if anything you'd create an equity account called member contributions.

[@carolynpeppers8339]

Do you have this for QB desktop?

[@nerdenterprises]

I don't, but it works the exact same way. In Desktop you click Company, then make General Journal Entries. From there it looks a little different, but works exactly the same. You have your debits and your credits, and accounts etc..

[@ramehkhazen2223]

Maybe a dumb question. After inputting the settlement statement using journal entries do I just exclude the transaction that pulls automatically from the online banking records?

[@nerdenterprises]

Never a dumb question! If done correctly the transaction you post should match up. In fact if there is banking activity, it usually winds up posting through your escrow account, and that's how the escrow account zero's out.

[@shoegum7362]

Why not use classes for property addresses; what advantages of using customer name or location?

[@nerdenterprises]

If we are talking about a rental property you can do classes too (different reporting) but you need them as customers so you can post invoices to capture the rents and know who has / hasn't paid rent each month.

[@shoegum7362]

@@nerdenterprises sub'd and will check out your site. awesome work and help. thanks

[@nerdenterprises]

@@shoegum7362 Thanks! I'm easy to find if you ever have any questions.

[@themedspaaccountant]

I've read other posts on setting up each property as an asset and create sub accounts for the expenses related to that property. Is that what you did here or you did it differently b/c you used the location feature? Does it matter which way you do it?

[@nerdenterprises]

Hi! If you are doing a flip / rehab then that is the way to do it. You still have to be sure about what costs can be capitalized vs expensed - talk to your tax pro about that. Otherwise that is how you should do it. In this video I do have you record the property as a Fixed Asset - that ALWAYS needs to be done that way. Then you can create another fixed asset account for "improvements" to capture the money you spend fixing the place up.

[@mindysheldon5101]

why don't you book settlement fees to COGS since they get added to the basis?

[@nerdenterprises]

Mindy Sheldon you could do that. it's all going to figure into your gain or loss on sale. if you want to show them as added to the basis, then on s purchase it should actually go on the balance sheet, not COGS or expense.

[@michelecoonce6585]

I am a little confused & I am probably over thinking it but on my hud I received a $45k credit towards my down payment & am unsure of how to enter that entry. Can you please advise

[@nerdenterprises]

Hi Michele. It depends on what the credit was for. So if you made a payment into Escrow prior to closing, and the credit is from that, then that payment has to be somewhere on your books. You would book that payment to the Escrow asset account, and then book the credit in your HUD-1 Journal entry through that same account. It will zero out. if the credit is for something like property taxes, then you book it to the property tax expense account.

[@michelecoonce6585]

Thank you. The lender gave me a $45k credit towards my down payment for all the work I did on the building prior to buying it. so would that credit go under building maintenance? @@nerdenterprises

[@nerdenterprises]

@@michelecoonce6585 Yes, or if it's a lot of money it goes to Improvements (asset), so it increases the value of the building. Check with your tax pro on that.

[@jamesw.harrellii7298]

Question...how do you save a journal when the balance sheet does not balance? Example: HARD MONEY LOAN and the Borrower receives a lesser amount of cash after all fees and costs and the seller receives a larger amount of cash at closing. Quickbooks Online will not allow me to Save the journal and view the balance sheet. Am I missing something?

[@nerdenterprises]

Yeah, there's always a way to balance the entry. So The difference between the total loan, and the cash received is the fees. So you credit loan payable for the full amount of the loan, debit cash received, and debit fees. The entry should balance that way.

[@jamesw.harrellii7298]

Thank you

[@jamesw.harrellii7298]

By the way..great videos. I'm a novice but am learning a great deal from the videos.

[@nerdenterprises]

Thank you James. That is music to my ears!!!