How do I add my cottage mortgage payments into the rental group.

GHebert

Only Mortgage Interest is listed in Rental Expense. I want to add "CBC Mortgage" to Rental Expense. (Silly that it's not there already). I followed instructions on this community page:

I opened the Category List. I went to Rental Expense. I clicked on New Category. I entered "Mortgage (Rental)". It was created but is under Personal Expense. I tried it again with "CBC Mortgage". It went to Personal. I tried "CBC" with no mention of "Mortgage". It went to Personal. Has anyone had any success with this? I am using Business & Rental Property.

Frankx

Hi @GHebert

There is a reason that you only see "Mortgage Interest" and not "CBC Mortgage" in the "Rental Expense" section.

And the reason is that payments that you make to pay off a mortgage, or any other type of loan, are not expenses (or specifically in this case are not "rental expenses").  Rather, those payments reduce the balance of the loan (mortgage) which was used to purchase the property (the rental asset).  Loans, mortgages and similar borrowings are liabilities (or "amounts that you owe") and as you make payments on such liabilities (in your case the periodic "mortgage payments") their balances decrease.

If you use the new "Mortgage (Rental)" expense category that you recently setup in Quicken for your payments, you will not have the proper balance in your "CBC Mortgage" account (the balance will be higher than it is in reality) and you will be overstating your rental expenses (which will lower the profitability of the rental property).  So, I would suggest that if you have made any entries into this new "Mortgage (Rental)" expense category that you delete them and after that, you should also delete that category as well.

Let me know if you have any followups.

Frankx

volvogirl

And as answered on your other post......for a category to show up under Rental or Business you have to assign a Schedule C or E tax line to it.  You need to EDIT the category and click on the Tax tab.

Frankx

Hi @GHebert

There is a reason that you only see "Mortgage Interest" and not "CBC Mortgage" in the "Rental Expense" section.

And the reason is that payments that you make to pay off a mortgage, or any other type of loan, are not expenses (or specifically in this case are not "rental expenses").  Rather, those payments reduce the balance of the loan (mortgage) which was used to purchase the property (the rental asset).  Loans, mortgages and similar borrowings are liabilities (or "amounts that you owe") and as you make payments on such liabilities (in your case the periodic "mortgage payments") their balances decrease.

If you use the new "Mortgage (Rental)" expense category that you recently setup in Quicken for your payments, you will not have the proper balance in your "CBC Mortgage" account (the balance will be higher than it is in reality) and you will be overstating your rental expenses (which will lower the profitability of the rental property).  So, I would suggest that if you have made any entries into this new "Mortgage (Rental)" expense category that you delete them and after that, you should also delete that category as well.

Let me know if you have any followups.

Frankx

volvogirl

And as answered on your other post......for a category to show up under Rental or Business you have to assign a Schedule C or E tax line to it.  You need to EDIT the category and click on the Tax tab.

GHebert

Frank. Thank you for you reply. I was thinking of my cottage, which I rent to help pay the mortgage, as a fully separate entity from me. But as you wrote, it is not. It is my liability and my profit if I make one. I will keep the CBC Mortgage category under my Personal Expense in order to keep those costs out of my Home Expenses so that I can track them. I just started actually using Quicken. It sounds like I should setup another account with my mortgage bank so show transfers and debt reduction. I assume that when I look at my profit and loss for the cottage to see if it is paying for itself, my mortgage payment will be counted and not just the Rental Interest. That is why I thought the full mortgage payment should be under Rental.

GHebert

And Volvo Girl, as Frank noted, and as I just checked, there is no line on Schedule E for the cottage mortgage. There is a line for rents received, Line 3, and Mortgage Interest, line 12. So, there is not line in Quicken either.

I will leave the mortgage payment under Personal Expense. Like I wrote Frank, I am curious to see how Quicken accounts for my profitably or loss on the cottage when I get to that part. I am concerned that the principal portion of my mortgage payment will not count as a cost on the cottage profitability bottom line. It is a cost to me and my rents have to cover it and any taxes on that income in order to break even, which is my minimum goal.

volvogirl

The principal part of the mortgage payment does not affect your income profit or loss. It is just a cash flow item.  To account for the cost on your tax return you need to add the cottage as an Asset on your tax return and Depreciate it over 27 1/2 years.  Quicken doesn't handle Depreciation unless the business version has it.

volvogirl

Here's some TurboTax guides and videos on Rentals

https://turbotax.intuit.com/tax-tips/rental-property/

What kind of Rental expenses can I deduct?

https://ttlc.intuit.com/community/credits-and-deductions/help/what-kinds-of-rental-property-expenses-can-i-deduct/00/26372

What is Depreciation?

https://ttlc.intuit.com/community/rental/help/what-is-rental-depreciation-and-how-does-it-differ-from-an-expense/00/26371

IRS publication 527 on Rental Property….

http://www.irs.gov/pub/irs-pdf/p527.pdf

GHebert

Thanks

GHebert

Volvo Girl: I have had the cottage since 2001 and have used Turbo Tax successfully to since then. I used my bank statements and Excel to capture and add up items for my return and check whether I paid all of my expenses for the cottage. This is the first time I am using Quicken to feed into Turbo Tas.

GHebert

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