Need some ideas

[Steve Blackwell]

> I think it's important to distinguish between the house (and land -> 
> let's call it the property) as an asset and the value of the mortgage
> as an asset.  If you sell the house, it is no longer on your books -
> or shouldn't be, because it doesn't belong to you (never mind what we
> say about a property "belonging to the bank").  It's replaced by a
> mortgage and a down payment, and the value of the mortgage is reduced
> by the payments.  I think you should have had an initial asset
> account for the house, then created a separate account for the
> mortgage, and when the deal closed, you should then have created a
> transaction that moved part of the value of the property to the
> mortgage account, and the rest to your bank account and expenses for
> realty and legal fees.  When you took possession of the house again,
> you should have done a transfer of the outstanding value of the
> mortgage to the property account and also transferred in an amount
> that would bring the property to its full value.  I'm not sure where
> that amount should come from, but you could use Equity (possibly
> Retained Earnings) as the other account.  I really suggest you talk
> to an accountant about that part, because there will be tax
> implications.  At any rate, once you sold the house the second time,
> you'd follow the same procedure, setting up a new mortgage account.
> You can't eliminate the property account, but it must show a zero
> balance. At any rate, you should have three relevant asset accounts:
> one for the property, and one for each mortgage - and may you not
> have a third.

The three asset accounts approach loan1 -> property -> loan2 makes
sense to me. I'm going with that.

Thanks to Mark S, Maf. King and Cam Ellison for your suggestions.

Steve