On 11/1/2023 12:03 AM, Edwin Booth wrote:
Hi. How do y’all deal with a mortgage escrow account? Specifically, each
month I pay into the escrow account along with my monthly PMI payment. It
is all an expense. But when the mortgage company pays out money from that
escrow account (for taxe and insurance payments) how do you account for
them in GnuCash? Or do you just wait until tax time and record it on your
return w/o even putting into GC?
Thanks, Edwin
"each month I pay into the escrow account along with my monthly PMI payment. It
is all an expense."
No it is not. In order to learn bookkeeping you need to unlearn the mental habit "if money leaves my pocket, an expense ---- and if money not leaving my pocket, not an expense."
When you make a mortgage payment it is a SPLIT transaction. What you pay (a
credit against your bank account) and debits to THREE accounts. Only one of
these, mortgage interest would be an expense account. The escrow account is an
ASSET, your money being safely set aside in order to pay expenses when they
come due. Expenses like real estate tax, water and sewer bills, property
insurance bills, etc. It is quite possible that the lender will send you a
statement for that account just once a year. You might want to be using the
previous statement to enter ESTIMATED transactions on estimated dates and then
reconcile (manually) when your next statement gives actuals.
Michael D Novack
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