Mortgage payments - how to track principle and impound portions as expenses?

Question

I set up a loan in Quicken for my mortgage. My bank does not have automatic download for this. The payment was allocated to interest (an expense), principle (payment to a liability account, the loan itself), and impounds (an account - which receives these deposits and pays for insurance and taxes).

Question is, how do I get the entire payment (all of its components) to show up as expenses on my Income and Expense reports? The payments to principle and impounds are transfers. If I enable showing transfers in the reports, I get all of the transfers from one bank account to another, etc - stuff I don't want. I don't see a way to show only the two transfers I want. Is there any way to do this?

Once in  the past, I tried creating expense catergories for principle and impounds and added them to the loan payment, with an offsetting amount unallocated - but that made it look like I had spent the money twice.

Solutions? Thanks.

Joseph Witkin · Answer

Thank you. I had the loan set up as was suggested. The transaction in the checking account had a 3-way split to interest (expense), principle (account) and impounds (account). Problem was that for my overall cash flow, I was out the whole payment - though theoretically, balance sheet-wise, I still had the money in the accounts- but I wanted the entire payment to show up in my I and E report. I think I found the workaround-I made the 3 way split into a 5 way split, adding a new expense category for the entire payment and an uncategorized negative amount to balance it. Then in my I and E I include that expense category and just make sure I do not include the interest category or uncategorized transactions.

Then I have a separate report that shows transfers but only includes the interest category and the principle and impounds accounts- that gives me the info I need at tax time, and I can enter the impound payments (property tax) as well.

volvogirl · Answer

Sounds like he has the accounts set up right.  The problem which is a common question is to show the principle and escrow as expenses.  The split to the impound account is not the expense.  The expense is the amounts paid FROM the impound account to insurance and taxes.  Are those being entered to the expense categories?

The principle part of the payment is NOT an expense at all.  It is just a transfer to the loan.   It is a cash flow item.

NotACPA · Answer

You'll need 3 accounts and a category for this.

Your bank/checking account, from which you make the payments,

A Mortgage Liability account … the amount of the loan that's outstanding,

An Escrow/Impound account … for the amounts withhold for future payments such as taxes and insurance, AND

An  Interest Category for that portion of the payment.

Q's Loan  Wizard can setup this payment for you.  Once you get the payment created, via the Wizard, I've found it to be very accurate.

The total payment will  show in your checking account …  and you can create a report to show this payment, and it's split lines.  If necessary, you can use a slightly different name for the payment (say, if you also have credit card payments to the same bank).