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
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