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I co-own a house with two unrelated friends. We have a single mortgage that we're each responsible for our fraction of. We've been keeping track of our payments in a spreadsheet but for a variety of reasons we'd like to switch to real accounting software. I'm trying to use QuickBooks Online and model the house as the company, of which we are all owning partners, each with our own equity accounts.

My question is how I should record mortgage payments. I want to record the payments so that they credit (decrease) the balance of our shared bank account, and debit (decrease) each of our equity accounts in a fixed proportion. I can do this with a journal entry with multiple debit lines, but that appears to require me to figure out the exact dollar amounts for every debit line for each account -- so I have to multiply the payment by each of our fractions every time. I'd like the debit lines to be automatically calculated based on the fraction of the house that each of us owns and therefore pays in mortgage. Or somehow get that effect. Could I fake this with a "product"? Or can I get this effect by reconciling accounts later or something?

Is there a better way to be doing this? Maybe with a package other than QBO? Any pointers appreciated.

  • Should each of your equity in the property match exactly the amount that you've paid into the property? Or do you have a separate independent arrangement? – mbhunter Nov 25 '10 at 7:39
  • did you mean to say "debit (decrease) the balance of our shared bank account, and credit (increase) each or our equity accounts" ? As you currently have it worded I can't really make out what you are trying to do. – Justin Ohms Jul 9 '11 at 4:05
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How you should record the mortgage payments depends on if you are trying to achieve correct accounting, according to the standards, or if you are just tracking everything for you and your friends.

If you're just keeping track for personal reasons, I'd suggest that you set up your check (or journal entry, your preference) how you'd like it to be recorded. Then, memorize that transaction. This allows you to use it as many times as you need to, without having to set it up each time. (Also note: there is no way to record a transaction that decreases cash and increases equity.)

If you're trying to keep track of everything according to accounting standards, which it should be if you've set up an official business, then you have a lot more tracking to do with each payment. Mortgage payments technically do not affect the equity accounts of the owners. Each mortgage payment should decrease the bank balance, increase interest expense and decrease the mortgage balance, not to mention tracking any escrow account you may have. The equity accounts would be affected if the owners are contributing funds to the bank account, but equity would increase at the time the funds are deposited, not when the mortgage payments are made.

Hope this helps!

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You could classify the mortgage as a different assets class and then create automated additions and deductions to the account as deems fit.

other than that quickbooks online is a bit fishy so it seems.

  • Wanna explain the "bit fishy" comment portion? I thought they were above board, so anything you share could be helpful. – MrChrister May 15 '11 at 18:21
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What is the corporate structure?

Your partnership agreement or LLC operating agreement should dictate how you approach this.

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