Need help to record mortgage for rental properties

Peter5 · ‎01-10-2019

Hello, I am found a chart of account template for rental property. I don't understand why there is an account for "Real Estate Mortgages" and for "Mortgage interest payment"?

https://stratafolio.com/setting-up-a-chart-of-accounts-for-your-real-estate-company/

Screen Shot 2019-01-11 at 12.05.11 AM.png

Rustler · ‎01-11-2019

Your payment when you make the monthly mortgage payment is composed of two parts, the mortgage company statement shows that. You pay down the loan, and you pay interest on the borrowed money

the account Real Estate mortgage is a liability account, the loan
the account Mortgage interest payments is an expense account for interest paid

just like it says in your screen shot far right column

View solution in original post

Rustler · ‎01-11-2019

Your payment when you make the monthly mortgage payment is composed of two parts, the mortgage company statement shows that. You pay down the loan, and you pay interest on the borrowed money

the account Real Estate mortgage is a liability account, the loan
the account Mortgage interest payments is an expense account for interest paid

just like it says in your screen shot far right column

View solution in original post

lynda · ‎01-11-2019

hello @Peter5:

Most rental property companies that I’ve worked with, the owner of the property has a mortgage. I think this is a simplistic way of showing the interest. Obviously the interest is an expense and the mortgage is a long-term liability. So I’m not sure why you’re asking this question. If you don’t have a mortgage on your property, hooray! You don’t have to use that account and you can make it inactive.

lynda

lynda · ‎01-11-2019

Great answer, rustler. Sorry it came up that this wasn’t answered so I answered it. 😊

Rustler · ‎01-11-2019

Morning and thanks

this site does that a lot, and other things that are frustrating

Peter5 · ‎01-27-2019

To record mortgages, do I need to setup a long-term liabilities account for each properties?

GarlynGay · ‎01-28-2019

Hello Peter5,

That is correct. To track a loan payable, you'll need to add a liability account. To learn more about this, please check out this article:
Record a Loan and Its Payment.

Let us know if you have any questions. We'll be right here to help.

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Need help to record mortgage for rental properties