Mortgage investment income

Securenym.net wroberts at securenym.net
Mon Nov 7 08:46:03 EST 2016


I have tentatively come to this exact conclusion with a slightly different twist, but your concept of the new loan is better.  It is interesting that I struggled with this for weeks, once I finally decide to get help, the process of writing it down and organizing it so the dilemma is understandable to others also helps me to comprehend it.

Thanks again for your suggestion.

Walt

> On Nov 7, 2016, at 4:36 AM, Dale Alspach <alspachde at gmail.com> wrote:
> 
> One way to think about this is to view this as two transactions. In the first transaction you are making a loan. The second transaction is receiving a payment.
> 
> Suppose in your example the actual check received is for $800 instead of $1000. You take $100 from your checking account (asset) and transfer it to unpaid interest (asset) and place the actual $100 with the $800 as if you had given the relative the $100 as a new loan.
> Now you receive a payment of $900 from the relative and allocate it as $750 interest income, $150 taxes.
> 
> Dale 
> 
> On Nov 6, 2016 8:54 PM, "Securenym.net" <wroberts at securenym.net <mailto:wroberts at securenym.net>> wrote:
> Hi, all.
> 
> I’m relatively new to gnu cash (and accounting for that matter).  I am trying to convert a spreadsheet that manages a mortgage I hold on a relative’s property.
> 
> I’ve read the “Loan to a friend” docs, and google (actually ixquick) searched for how to do this.
> 
> Here’s my problem.  The mortgagee is a more or less deadbeat.  It’s a long story. . .
> 
> Here’s what’s supposed to happen:
> 
> 1.  Mortgage prin & interest calculated on the last day of the month.
> 2.  Payment rec. last day of month, credited to P&I
> 3.  Property holder pays their own property taxes.
> 
> This I can figure out.  Prin is credited to Mortgage in the Capital Asset, reducing the balance (split transaction)
> Interest is credited to present income in the Income section and placed in the checking account (current assets).
> 
> As long as that happens life is good in gnu land.
> 
> But, as it happens this particular relative doesn’t do that.  I now have a tax escrow to deal with as well, so I changed the setup to do this:
> 
> 1.  Mortgage Asset (prin)
> 2.  Mortgage Interest (income)
> 3.  Tax Escrow (short term liability, as this is restricted funds to be used for taxes)
> 
> Because several payments are missed each year, the unpaid interest was being paid by the end of the year.  So, rather than inflate the principle balance, I decided to carry unpaid interest in a separate account which the mortgage documents permit me to do.
> 
> Next iteration:
> 
> 1. Mortgage asset
> 2.  Mortgage interest (income)
> 3.  Tax Escrow (liability)
> 4.  Unpaid interest carried forward (???  long term asset, I think).
> 
> So, my question is how is the best way to do this.  To give a concrete example of what is supposed to happen, the payment is $1000 on the last day of the month.  The interest is 750, the taxes are 150 and the principle is 100.
> 
> This breaks down this way:  A check comes in for $1000 and is deposited in the Checking account.  the money is then allocated to tax escrow liability, present interest, past due interest and if any is left over, principle.
> 
> When a check doesn’t come in, the interest is still due, but unpaid, and does not become income to me until it is paid.  (There is a minimum threshold income that the IRS insists on, but that hasn’t been an issue, at least not yet).
> 
> So, how do I move present interest income from the income ledger to the unpaid interest ledger, moving it from an income item to an asset item?
> 
> Thanks for any insight!
> 
> _______________________________________________
> gnucash-user mailing list
> gnucash-user at gnucash.org <mailto:gnucash-user at gnucash.org>
> https://lists.gnucash.org/mailman/listinfo/gnucash-user <https://lists.gnucash.org/mailman/listinfo/gnucash-user>
> -----
> Please remember to CC this list on all your replies.
> You can do this by using Reply-To-List or Reply-All.



More information about the gnucash-user mailing list