Overview
Follow this guide to correctly track a mortgage and record mortgage payments for a property in DoorLoop. There are a few ways to do this depending on what you are looking to record.
The instructions below are very basic and used as an example. It is suggested that you consult with your accountant and modify these steps based on your needs.
If you are looking to only record the expense of a mortgage payment, use this method.
If you are looking to also track amortization and escrow payments, use a combination of sections 2 and 3.
Create a Fixed Asset for your Property
On the main menu, click Accounting and then click Chart of Accounts.
On the top right corner, click + New Account.
For the Account Info, enter the following:
Type: Asset > Fixed Asset
Account Name: What you want to name your fixed asset (In this case it's your property)
Description: (Optional)
Active Account: Yes
Click Save to Finish.
Track a Mortgage, including Amortization and Escrow
Add the mortgage’s long-term liability account to the Chart of Accounts. DoorLoop already provides a Mortgage liability account, but you may want to create a new account if you plan on tracking multiple mortgages.
Add specific expense accounts to your Chart of Accounts for expenses that may be paid directly by the mortgage company from escrow. For example - property taxes, homeowner's insurance, etc.
Record the initial loan with a journal entry.
Credit the mortgage’s liability account for the amount of the loan.
Debit the property’s fixed asset account for the amount of the loan.
If you’ve already made some payments, balance the journal entry using an equity account, such as the Opening Balance or Owner Contribution.
For example, let's say the mortgage is for a property valued at $250,000 and the remaining principal balance is $200,000. The journal entry for this mortgage would be:
DEBIT the Property Fixed Asset account: $250,000
CREDIT the Mortgage Long Term Liability account: $200,000
CREDIT the Owner Contribution Equity account: $50,000
When recording a mortgage payment, create an Expense to the bank as a payee, and use the accounts this payment is correlated to (Mortgage Interest, Mortgage liability, Mortgage Escrow).
Record a Mortgage Payment (Expense)
Add an expense account called Mortgage Expense to the Chart of Accounts.
a. Click Accounting and then click Chart of Accounts
b. Click the + New Account button at the top right corner
c. Use Type: Expense
d. Account Name: Mortgage Expense
e. Click Save.
Create an Expense for the mortgage company using the newly created Mortgage Expense account.
Record a Payment from Escrow by the Mortgage Company
Use a journal entry to record a payment made from escrow by the mortgage company:
For example, let's say there was $10,000 in escrow. The mortgage company used $5,000 to pay property taxes. The general journal entry for this escrow payment would be:
DEBIT the Property tax expense account: $5,000
CREDIT the Escrow current asset account: $5,000
Disclaimer:
The information provided is not offered by a licensed accountant and is intended for general informational purposes only. It is crucial to verify local accounting laws and regulations independently, as they vary. This information should not be considered a substitute for professional advice. For accurate guidance, consult a licensed accountant familiar with your jurisdiction's specific requirements. The author and publisher are not liable for any damages or losses resulting from reliance on this information.