Purchase of Investment Property

[prl]

On 26/09/12 16:19, Maf. King wrote:
> On Tue 25 September 12 19:54:13 oneworld wrote:
>> I have spent 1 whole day searching on the internet, but haven't been able to
>> find an answer. So can some one please help me with this. That will be very
>> much appreciated.
>>
>> I am purchasing an investment property. I have paid .25% holding deposit
>> from my own money. How do I record this transaction (journal entries) ?  The
>> questions that came to my mind are:
>>
>> (i) Is the property an asset, considering that I have not got possession of
>> the property yet ?
> Hi,
>
> I would record the deposit as an asset.  Assuming that the purchase goes
> through ok, and you don't loose the deposit, then it will become the asset
> price.  If it does fall through, then move it to an expense account at that
> time.  (IANAA, nor do I have any idea about Ozzie tax laws etc...)
My guess would be that losing the deposit because the purchase of an 
investment property fell through would be a tax loss in Australian tax 
law, so what you've proposed is probably sensible, but IANAL. The asset 
and expense accounts should probably be ones associated with taxable 
investments if the accounts file is also being used for household accounts.