Rental property and buyer's credit

Client purchased a rental for 500K. On the buyer's side of the purchase statement, there's a 15K credit. How is this reflected in a journal entry? The purchase price is 500K, loan, loan charges and then the earnest money deposit.

What kind of credit?
Does it reduce the overall amount the purchaser has to pay for the property?

What kind of credit?
Does it reduce the overall amount the purchaser has to pay for the property?

No, it doesn't reduce the purchase price.

So you're saying the buyer gave the seller a credit?

That's odd.

I would ask the purchaser what the credit was for and then let us know.

If it's an active rental property and the buyer is paying the seller an extra credit, maybe it's for rents due to the seller that have not been collected? Property taxes the seller prepaid? Etc? Is there any detail on the closing statement that indicates something or does it simply say "Buyer's credit to seller - 15k?"

It couldn’t be earnest money could it?

I hope your client isn’t Ernest Money (that’s for the Tax Almanac old-timers).

I was under the impression that those are usually last minute adjustments to sale price. Why it is easier to list a credit instead of adjusting the sale price I don't know. I want to say we usually end up reporting them as an expense of sale since the 1099-S is always the gross top line $.

I would ask the purchaser what the credit was for and then let us know.

Exactly. How can you possibly determine the proper treatment if you don't know what this is? But just for fun, how about this: lender would only lend a % of the purchase price and buyer needed a larger loan. Real price based upon economics is $485,000, but loan was funded as though price was $500,000.