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Accounting for shared equity house purchase

Is shared equity accounted for as a liability in a property developers accounts?

Deelopment site includes obligation to sell a number of homes as shared equity. 

Assume property price was £y. At point of purchase the buyer pays 80% of y. With the difference being shared equity percentage.

No cash is paid to the local authority at purchase but local authority has the right to place charge over the property.  

Can anyone assist with the accounting entires to be recognised in the books of the developer?

Do you recognise the shared equity percentage in the books of the developer even though it will never receive the cash?   

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09th Apr 2019 11:06

yetty707 wrote:

Can anyone assist with the accounting entires to be recognised in the books of the developer?  

The developer's accountant would be best placed to advise but in any event someone who has read and understands the legal agreements involved.

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