Taxes and fees related to fixed asset purchase

[Balthazar]

I'm running a side business renting out apartments to tourists. I'm trying to do some accounting on my own, but will of course have a real accountant look at it later. I'm trying to understand how to record taxes and fees related to purchase of properties. In the country where I've purchased property, there are taxes that must be paid when a property is purchased, these are one-time payments when you buy a property, proportional to the purchase price. In addition, there are some minor fees to the offices who register the transfer of ownership etc. In my own country, these fees would all be paid by the seller, so the buyer just transfer one sum, in Portugal where the property is bought, it's paid by the buyer.

It makes sense to me to think of these transactions as investments, not expenses. If I didn't pay these fees, I wouldn't have the apartment, and they are only paid once, not regularly.

My first attempt was to make a fixed asset account in QuickBooks with the name of the property, and one subaccount with the original cost, another for depreciation, and a third for these taxes. I'm not sure if this is an acceptable approach, because the value of the apartment doesn't actually increase with the payment of these taxes. Maybe they should be treated in a fashion similar to Prepaid Insurance, and asset account which will be slowly deducted over the useful life of the property?

 

[Bert82]

It makes sense to me to think of these transactions as investments, not expenses. If I didn't pay these fees, I wouldn't have the apartment, and they are only paid once, not regularly.

That is correct. Normally it's two asset accounts. One for the apartment and the second for the ground/land/real estate.

The cost of an item of property, plant and equipment comprises..
it's purchase price, including (...) non-refundable purchase taxes(...)

You can probably split the tax/fees (Portugal: Imposto Municipal sobre as Transmissões onerosas de Imóveis, short: IMI) between the land and the apartment value.
The partial fee related to the apartment can become depreciated in the useful life, the partial fee related to the land increases the asset cost (ground) and can't get depreciation.

 

[Balthazar]

Thanks for your help, Bert!