[GNC] Entering my real estate and mortgage?

[R Losey]

Interesting - in the US, if we have a mortgage on our house, most people
consider it prudent to have insurance on their house, and there are usually
taxes based on house value (property taxes). The banks, being paranoid
about losing their money, require house insurance while there is a
mortgage, and they push hard for an escrow account to collect the funds to
pay both the insurance and taxes.


On Sun, Sep 29, 2024 at 1:39 PM Boniforti Flavio <boniforti.f at gmail.com>
wrote:

> Hi Michael.
>
> I'm in Switzerland and there's no thing like the escrow account you've
> mentioned - thanks.
>
> F.
>
> https://www.instagram.com/boniforti_music
> https://soundcloud.com/boniforti_music
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>
>
> Am Sa., 28. Sept. 2024 um 23:54 Uhr schrieb Michael or Penny Novack via
> gnucash-user <gnucash-user at gnucash.org>:
>
> >
> > > HERE you are discussing transactions that were NOT enterable ib your
> > books (which are irrelavant to books begun 31.12.2023
> > >
> > > 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?
> >
> > If what I am about to say confuses you, come back to this line and
> > think---- if on 31.12.2023 you had 10,000 in your checking account, of
> > what relevance is it (on 31.12.2023)
> >   how it got there. All that matters NOW is how much.
> >
> > When you opened your books 31.12.2023 you should have entered AS OF THAT
> > DATE
> >
> > "assets":"fixed assets":"Real Estate":"House":"basis" debit
> > 500.000          (credit equity 500.000)   that's what it cost <NOT
> > relevant where money came from>
> >
> > "assets":"current assets":"bank accounts":"bank y":"checking"      debit
> > checking account balance of that date (credit equity that amount   If
> > seems odd, you could have current assets other than in bank accounts,
> > could have accounts at multiple banks, could have accounts other than
> > checking. You can always do it simpler at the start and modify your CoA
> > later as needed.
> >
> > "liabilities":"mortgages":"mortgage-abc"   credit balance still owed
> > 31.12.2023  and debit equity that amount
> >
> > BTW ---- I would use as description "opening entries" and of course if
> > you use the Starting Mount facility the equity side would have been done
> > for you. Since I learned pen and ink on paper I use explicit
> transactions.
> >
> > NOTE: What jurisdiction? Does your mortgage payment include an amount
> > paid into an escrow account from which insurance and taxes are paid. If
> > so, the balance as of 31.12.2023 would be an asset "escrow account"
> > Legally yours even though you can't access it.
> >
> > Michael D Novack
> >
> >
> >
> >
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-- 
_________________________________
Richard Losey
rlosey at gmail.com
Micah 6:8