How to track mortgage (liability) payments as part of expense
wandering.womble at gmail.com
Mon May 15 19:39:46 EDT 2006
First, my thanks for all those involved with making this software. It
'just works', the importers (qif/ofx) are very good (considering what
they have to deal with as input), and it's straight forward to understand.
However, there's one thing I'm having difficulty with: how to handle
mortgage payments, so that they show up as part of expense reports,
which I'm using to figure out where our money is disappearing to :)
(My apologies if this has been covered before- I've looked at the
manual, and used Google, but so far I've not found anything helpful- I
may just be using the wrong terms though; I'm not an accountant!)
This is what I've done:
Created a liability account for the mortgage.
Entered an initial transaction (from Equity:Opening Balances) for the
Entered an 'adjustment' transaction to make the current mortgage balance
match the official bank statement from the beginning of the period from
which I've started entering/importing data (Feb this year).
I'm not really interested in tracking the above two transactions;
they're just informational to me.
Our mortgage is paid for by an automatic payment at the bank. This
payment covers principle reduction, interest, and local taxes. As it's
an automatic payment at the bank, I haven't used GnuCash's scheduled
transaction feature. All payments will appear when I import the next
OFX export from the bank.
So when I import the OFX file, I assign (deposit) the automatic
withdrawals for the mortgage from our normal bank account (in)to the
Liabilities:Mortgage account in Gnucash.
I then manually create transactions in the Liabilities:Mortgage account
in GnuCash which deduct interest and tax payments to the appropriate
expense accounts- Mortgage Interest, and local taxes (both expense
(I realize that these second level manual transactions are redundant,
that I could create a split for the imported payment transactions. But
I personally just find this easier to read as a summary for the main and
mortgage accounts- it effectively groups things in a way that makes
sense to (if not to anyone else.))
Now when I do an expense report, everything looks good- I can see how
much we're spending on groceries, utilities, interest, etc- but NOT the
payments for mortgage principle.
I could instead assign the automatic bank withdrawals to an expense
account (so they show up on the budget report) but then the liability
total won't be reduced- the expense reports will show what I want, but
the net worth reports won't. If I then set up transactions from the
expense account to the liability account, I'll end up back at the
beginning- liability is reduced, but this expense account will have a
Effectively, in this one case, I effectively want to 'double count'
these principle payments- but I realize this isn't particularly good
double-ledger book keeping.
So far the only way around this that I can see is to create a new equity
account like 'opening balances', called something like 'mortgage
fiddle', and create manual transactions mirroring the actual principle
reduction, with the destination being the liability account.
Is there a better way to do this- so that you can both track liability
(loan) repayments as an expense and also have them reduce the loan
principal? i.e. have both expense and asset reports being correct?
Thanks in advance for any suggestions-
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