[GNC] Entering my real estate and mortgage?

[David Cousens]

Flavio,

Does the Reservation Fee form part of the value of your apartment or is
this a fee or commission paid to a real estate agent?  If so then this
is an expense rather than a contribution to the capital value of your
property. Assuming it is a fee charged for services rendered, it does
not add to the value of the property and is an expense incurred in the
purchase of the property. In that case, I would record the purchase as
follows:

Asset:Fixed Assets:RealEstate           increase (debit)  500K
Liability:Loans:Mortagage Loans         increase (credit) 350K
Assets:Current Assets:Checking Account  decrease (credit) 150K
Assets:Current Assets:Checking Account  decrease (credit)  50K
Expenses:RealEstate:Fees andCommissions increase (debit)   50K

either as a single transaction or two or three separate transactions
where they took place on separate dates.

E.g. Downpayment might be recorded at one date as
Asset:Fixed Assets:RealEstate           increase (debit)  150K
Assets:Current Assets:Checking Account  decrease (credit) 150K

and the final settlement at another date as:
Asset:Fixed Assets:RealEstate           increase (debit)  350K
Liability:Loans:Mortagage Loans         increase (credit) 350K
Assets:Current Assets:Checking Account  decrease (credit)  50K
Expenses:RealEstate:Fees and Commissions increase (debit)   50K

If the 50K is not a fee but does increase the value of the property
then the Expense account would be replaced with the
Asset:Fixed Assets:RealEstate account in the above.

Unless you need to preserve the detail above, you could record it as 
opening balances for the Asset:Fixed Assets:RealEstate account and the
Liability:Loans:Mortagage Loans account with the balances at the date
you opened the books but in this case the transfer account will be
Equity:Opening Balances and not your checking account

Asset:Fixed Assets:RealEstate    increase (debit)  500K
Equity:Opening Balances          increase (credit) 500K
Liability:Loans:Mortagage Loans  increase  (credit) xxxK
Equity:Opening Balances          decrease  (debit)  xxxK

where xxxK is the balance of the loan  at 31.12.2023

If you enter the transactions prior to 31.12.2023 then you will have to
adjust the opening balances to reflect the changes in equity and you
would need to record the loan payments and interest expenses that have
occurred since the purchase to arrive at the values at 31.12.2023. 
It is possible to do this, but is a bit tricky.

David Cousens


On Sat, 2024-09-28 at 23:07 +0200, Boniforti Flavio wrote:
> Hi.
> 
> I am sure somebody can help me validate my understanding on how to
> add/enter my real estate and my mortgage correctly into GC.
> 
> I would enter it as follows (let's assume the real estate total cost
> is
> 500k):
> 
> Assets:Fixed Assets:Real Estate - increase 300k
> Liabilities:Loans:Mortgage Loans: - increase 300k
> Assets:Fixed Assets:Real Estate - increase 150k (downpayment)
> Assets:Current Assets:Checking Account - decrease 150k (downpayment)
> Assets:Fixed Assets:Real Estate - increase 50k (reservation)
> Assets:Current Assets:Checking Account - decrease 50k (reservation)
> 
> If the above is correct, there's another question. I started using
> GnuCash
> this year and put the opening balances of all my accounts dating back
> to
> 31.12.2023, but I bought my apartment back in 2018. If I look at it
> now, I
> would have a huge negative balance on my checking account (because
> the
> money was spent in 2018 but I have the opening balance from
> 31.12.2023).
> Should I just add another "opening balance" in my checking account
> which
> equals both the downpayment and the reservation fee?
> 
> Thanks,
> F.
> 
> https://www.instagram.com/boniforti_music
> https://soundcloud.com/boniforti_music
> https://bonny-j.bandcamp.com
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