Accounting for Land Flipping

[Peter Maggio]

Hello, I'm looking to get started in rural land flipping. My plan is buy and sell for terms. I'm somewhat familiar with small business accounting as I've run a tiny retail business for the last year and a half and done my own taxes for it. From what I gather, land obtained would go under COGS which makes sense. The part I'm less sure of is how to do the accounting for the repayment. Any resources out there that can help me learn this stuff? Or at least a general explanation so I can go find more targeted information?

[Kristen Ambrose]

Yes it's accurate. I track land as inventory until it's sold. Then I move it to COGS and set up a note receivable. Payments are split between principal and interest. Principal lowers the note and interest is income. That's how I do it for my real estate clients.