Purchase Closing Statement Bookkeeping: How to Record a Property Purchase in Your Books

What is on a purchase closing statement?

The statement has 4 groups: the purchase price, costs charged to the buyer, lender charges, and credits. Credits include your earnest money and anything the seller pays toward closing. The bottom line is the cash you brought.

• Purchase price: the contract price. $285,000.00 on Project 1.
• Costs charged to the buyer: escrow, title and recording. $1,770.00 on Project 1.
• Lender charges: points and the fees the loan brings. $6,194.00 on Project 1.
• Credits: the new loan, your earnest money and the seller's share of any bill. $248,050.32 on Project 1.

Many statements show the buyer and the seller side by side. You record only the buyer's column. The bottom line is the amount you wired to escrow.

Which lines become the property's cost?

The purchase price and the costs of acquiring the property itself: owner's title insurance, recording, transfer tax, escrow fees, survey. The test is whether you would have paid it to buy the property with no loan.

• Purchase price: you pay it with or without a loan. Property cost.
• Escrow fee, your share: you pay it with or without a loan. Property cost.
• Owner's title insurance: it protects your ownership. Property cost.
• Recording the grant deed: it puts the property in your name. Property cost.
• Transfer tax and survey, when the buyer pays them: property cost.

On Project 1 the property's cost is $286,770.00. That is the $285,000.00 price plus $950.00 of escrow, $780.00 of owner's title insurance and $40.00 to record the deed.

Lines that pay for days after closing are different. Your share of property tax, HOA dues or an insurance premium is a cost of holding the property, recorded as an expense on that property.

Whether a cost is deductible now or added to basis is a tax question, and your CPA answers it. The books record where each line posts, with the statement kept as the source.

Which lines are loan costs, not property costs?

Points, origination, lender fees, appraisal required by the lender, and any interest reserve. They are costs of borrowing, not of the property, and keeping them separate matters when the loan is paid off at sale.

• Points and origination fees: a percentage of the loan.
• Lender fees: underwriting, processing and document fees.
• Appraisal, when the lender requires it.
• Lender's title insurance and recording the deed of trust: both exist only because of the loan.
• Interest reserve: loan money the lender holds back to pay its own interest.

On Project 1 the loan costs are $6,194.00: $5,804.00 of points, $350.00 of lender's title insurance and $40.00 to record the deed of trust. The points are 2% of the full $290,200 loan. Only $242,200 was funded at closing, and the other $48,000 is held for rehab draws. This loan had no interest reserve.

Draws, interest and the payoff each get their own entry against the same loan. We cover them in hard money loan bookkeeping. The payoff comes off the sale statement, which is how to record the sale of a house flip.

Where does the earnest money deposit go?

It is already on your books as an asset from when you paid it. At closing it is credited on the statement, so the entry clears the deposit rather than recording a new cost.

Demo Flips LLC paid $5,000 of earnest money on Project 1 on Sep 22, 2025. That day it was recorded as an asset, Earnest money deposit, Project 1. On Oct 8, 2025 the statement credited the $5,000, and the entry clears that asset to $0.

The statement balances on its own, but the books balance only when the deposit and the loan are each recorded on both sides. The deposit already left your bank in September. The loan is money you now owe the lender.

A deposit can also be refunded or forfeited when a deal does not close. We cover each of those endings in earnest money deposit bookkeeping.

What about prorated taxes and insurance?

Property tax and insurance crossing the closing date are split between seller and buyer. Only your share is yours; the credit or charge on the statement adjusts the cash you bring, not the property's cost.

On Project 1 the 2025 to 2026 property tax bill is $3,135.00 and was not yet paid at closing. The seller owned the property for 99 of its 365 days, Jul 1 to Oct 7, 2025. The statement credits you the seller's share, $850.32, because you will pay the whole bill.

The entry records the $850.32 as property tax owed for the seller's days. When you pay the bill, $850.32 of the payment clears that line, and only the rest is your holding cost. When the seller has already paid a bill that covers your days, the statement charges you instead, and that charge is your expense.

What is different when the purchase is a rental rather than a flip?

The lines are the same; the destination is not. On a flip the property's cost sits as unsold inventory. On a rental it becomes the property's basis, which is later split between land and building.

Demo Flips LLC and Demo Rentals LLC are sample companies.

A rental bought with a regular mortgage often has an extra line: an initial deposit into the lender's escrow account for property tax and insurance. That money is held for you, so it is recorded as an asset, not a cost.

The land and building split is the next question after this entry. It is not answered here, because it is a tax decision your CPA makes. We cover the basis record that starts with this statement, and that your CPA works from, in rental property cost basis and depreciation records.

What does the finished entry look like?

A single entry on the closing date: the property cost, loan costs, the new loan, the earnest money cleared, any proration, and the cash that left your account. It ties to the statement's bottom line exactly.

The entry for Project 1, dated Oct 8, 2025.

The debits equal the statement's charges, $292,964.00. The checking line equals its bottom line, $44,913.68.

1. 1Date the entry on the closing date shown on the statement.
2. 2Add the purchase price and the costs of acquiring the property to the property's cost.
3. 3Record the lender charges as loan costs on the same property.
4. 4Record the loan funded at closing as money owed to the lender.
5. 5Clear the earnest money deposit, and record any proration credit or charge.
6. 6Record the cash to close out of checking, and check it matches the bank statement.
7. 7Check that debits equal credits and that the cash line equals the statement's bottom line.

The down payment on Project 1 was $42,800, the price less the $242,200 loan. The cash to close is that $42,800 plus $7,964.00 of closing and loan costs, less the $5,000 deposit and the $850.32 tax credit.

This purchase then sits on its own row in the monthly report. In the per-deal report of our real estate bookkeeping report example, Project 1 shows a purchase cost of $286,770 and $6,194 of loan costs, the same split as this statement: the $390 of lender's title insurance and deed of trust recording sits with the loan costs. All $7,964.00 counts in the deal's profit.