how to handle buying property

[Cam Ellison]

Dino Vliet wrote:
> Hi folks,
> 
> first of all, I must admit that gnucash is amazing and
> kudos to all the contributors!!
> 
> I have this question. I'm planning to buy some
> property where I will make a down payment of 15% and
> the remaining will be through a loan with a annual
> rate of 8%. So now I want to set this scheme up in
> gnucash to keep track of how many money I spend on
> this investment. 
> 
> I also want to be able to see precisely all the extra
> funds I will have to throw at it for regestering this
> property and the like.

The full answer depends on what you are going to do with it.  Is this a 
rental property, i.e. are you buying a house and land to rent out to 
someone, or will this be your home?  Or is it land that you are planning 
to develop?

At the least, you need an Asset account, into which you enter the sale 
price.  If you want to track changes in value, it can be useful to use 2 
accounts, like this:

Assets--|
         |--Property--|
                      |--Purchase Price
                      |--Value Change

You need an offsetting Liability account to handle the mortgage, and you 
should set up the mortgage using the druid.  You also need Expense 
accounts to handle Property Tax, property-related legal expenses, and 
Mortgage Interest, at the least.  Set these up as sub-accounts under 
Property Expenses (or some such account).  If you are renting the 
property to someone else, you should have accounts for Rental Deposits 
(that's a Liability Account, unless you set up a separate bank account 
to hold deposits), and Expense accounts for Repairs & Maintenance, 
Management Fees, and so on.  If you make a capital improvement, you'll 
need to use the Value Change account for that, offset by the appropriate 
Expense.

HTH

Cam

-- 
Cam Ellison, Ph.D. R.Psych. #1417

Cam Ellison & Associates Ltd.
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