Category for mortgage downpayment?
Squeefmaster
for the amount of the loan, monthly hazard insurance, taxes, etc., but never
asks for the amount I paid at settlement. I can enter it by hand as a debit
from my checking account, but I'm at a loss how to categorize that. It's
not mortgage interest. It's not home equity (the wizard has already set up
the house asset at the correct value). Where did my $43,000 "go"? TIA.
Squeefmaster
R. C. White
We discussed this just a week ago. See the thread, "Subject: How to account
for down payment in quicken home and business", started by Rich, 11/22/02.
I haven't used the wizard, but it should get the same answer as the split
transaction route.
RC
--
R. C. White, CPA
San Marcos, TX
r...@corridor.net
Microsoft Windows MVP
"Squeefmaster" <greg...@nospam.nc.rr.com> wrote in message
news:D%2G9.33463$sj1.1...@twister.southeast.rr.com...
Margaret Wilson
paying an 1/8 of a point, so I guess the rest is not deductible. In
addition, I'm replacing my existing mortgage with a 3yr ARM. How do I set
this up? I'm used to setting up loans with a term like 30yrs or 5yrs for a
car. Help?
Thx!
Margaret
"R. C. White" <r...@corridor.net> wrote in message
news:3de8d56f$1...@nntp.corridor.net...
Dean
if the closing occurred in the US. Some items will be: commissions, survey,
points, attorneys, filing, taxes, insurance, etc.
Manually, I would create a "settlement escrow" account. Credits to the
escrow account come from good faith deposit, required advance payment of
expenses, and loan proceeds. All expenses then are entered as debits to the
escrow account.
The down payment gets entered as debit to the escrow account and a credit to
the asset's (real estate's) value, also called the "basis."
In business property, depreciation expense of the structure is a debit to
the basis.
You didn't ask, but improvements (such as a deck, pool, added room) are
debits to checking, etc; and increases to the property's basis. You need to
keep tabs on the basis for when the property is sold. The higher the basis,
the lower your taxable gain on the sale.
Dean
"Squeefmaster" <greg...@nospam.nc.rr.com> wrote in message
news:D%2G9.33463$sj1.1...@twister.southeast.rr.com...
Randy Stevens
Deluxe:
1. a "home asset" account, a House account for tracking the value of the
asset
2. a "home pre-mortgage account", a liability account to use before you
take possession of the property
3. a "home mortgage account", a liability account for tracking the mortgage
4. a "home escrow" account, an asset account for tracking escrow payments
that are part of the mortgage
Set-up the asset and pre-mortgage accounts first, when you first exchange
any money. This would typically be when you put up the earnest money. The
initial value of the asset account would be the selling price you agreed to.
Likewise, the initial value of the pre-mortgage account would be the selling
price (but a negative value since it is a liability). The two accounts
essentially offset each other; i.e., your net worth does not increase.
Any payments you have before closing (such as earnest money) should be
treated as a transfer from the source account (e.g., checking or savings) to
the pre-mortgage account.
When you close on the property, you need to create the mortgage account.
Use the wizard to create the account. Put in the correct terms of the loan.
Put in anything as the loan amount. Once the account is created, delete the
initial transaction in the account, i.e., the loan amount (don't panic,
we'll re-establish this amount later).
If you loan has escrow payments, then create a separate escrow asset
account. The initial value of the escrow account is 0.
Now, with your settlement statement in hand, go to your pre-mortgage
account. The pre-mortgage account basically needs to replicate your
settlement statement. You have already entered the selling price and
earnest money - you may want to annotate the settlement line number in the
memo field for these entries. Anything listed in the "debit" side of the
settlement statement will appear in the "increase" side of your pre-mortgage
account. Anything listed in the "credit" side of your settlement statement
will appear in the "decrease" side of your pre-mortgage account.
Most entries should be transfers to or from other accounts:
- downpayment, transfer from checking or savings to the pre-mortgage account
- mortgage, transfer from pre-mortgage to mortgage (there's your initial
balance in the mortgage account)
- pre-paid escrow, transfer from pre-mortgage to escrow account
- non-tax-deductable fees from pre-mortgage to home asset (since they add to
the cost basis of the home)
Taxable items are not transfers to other accounts. Instead of a transfer,
simply catagorize these into the correct expense catagory.
- interest for remainder of month
- loan discount points
- HOA charges
I suggest putting the line number from the settlement statement in the memo
field as it make things easier to track.
Once you have entered all the lines of your settlement statement:
1. The balance of your pre-mortgage account should be 0. This basically
reflects your settlement statement. You can now hide this account.
2. Your home mortgage account should reflect your correct mortgage. You
should edit your scheduled transactions to ensure your first payment is on
the correct day. Also, if you have escrow payments, you should add a
transfer into the escrow account.
3. Your home escrow account should reflect your correct escrow balance.
4. Your home asset account should reflect the purchase price of your home
plus any other non-tax-deductable charges which are added to the cost basis.
This is what I did. I hope it works for you.
- Randy
"Squeefmaster" <greg...@nospam.nc.rr.com> wrote in message
news:D%2G9.33463$sj1.1...@twister.southeast.rr.com...