mortgaging with gnucash

Andrew Gelvin Burley Grimes aggrimes at ncsu.edu
Thu Sep 23 09:54:29 EDT 2004


Hello --

I am about to buy a house, and I was looking for some clarification 
concerning some theoretical accounting issues.  I've been using gnucash 
for a while, and everything runs smoothly, so this isn't a question 
about operating gnucash per se.  I suppose it's really a question about 
the double-entry accounting system.
Questions follow:

1) When I take out this mortgage loan for the house, will I set up a 
liability account for the house, and an expense account for the 
purchase of the house as well, so that the first transaction concerning 
the house will be to move (say) $100,000 from the liability account to 
the expense account?  Or, will I actually just create the liability 
account with an opening balance of $100,000, which will decrease as I 
make monthly payments?

2) So either way, I end up with this liability account containing the 
amount of the house.  As I make payments, money will flow monthly from 
my bank account to the liability account, which will steadily decrease, 
right (I understand that I'll need to set up expense accounts for 
interest and other associated costs).  How can I keep track of the 
equity I build as time goes by?  Should I create a new asset account 
that will contain the money that I have paid towards the mortgage 
principle?  If so, how do I get the money into that account without 
taking it out of the liability account for the mortgage (and thereby 
increasing the balance of that account)?

thanks for your thoughts

Drew



More information about the gnucash-user mailing list