As David said.
In Australia, mortgage accounts can be quite complicated to represent.
They are often variable-rate; it's common to pay at 4-weekly intervals
while interest is calculated daily, but debited from the account at the
end of the calendar month; and advance payments (and sometimes
withdrawals against advance payments) are allowed.
It's also common for mortgage offset accounts to be attached to
mortgages, which, instead of paying interest, the offset account's
balance is subtracted from the mortgage accounts balance when the daily
mortgage interest is being calculated. This gives an effective interest
rate for the offset account equal to the mortgage interest rate, and is
tax free, because no money is actually paid.
It all meant that when I had mortgage account, the interest calculation
was way beyond my ability to convince GnuCash to calculate (and I didn't
even use an offset account).
Instead, I ran a spreadsheet that calculated estimated interest due, and
used that to make sure there weren't any gross errors in the bank's
calculations. I simply copied the actual interest in the monthly bank
statement into GnuCash, so that GunCash's balance would reconcile.
I do something similar for our on-call higher-interest savings accounts.
The interest on our current account is so pitiful it's not worth
calculating.
That's probably good enough for personal finances, but may not be good
enough for your business use.
Peter
On 3/12/2018 23:03, David T. via gnucash-user wrote:
Hal,
Most such calculations are devilishly difficult to represent with 100%
accuracy, which is why I have always opted to base my transactions on the
statement, rather than try to anticipate what the finance company is going to
come up with.
David T
On Mon, Dec 3, 2018 at 12:10, Hal Vaughan<hal@hal.dance> wrote: For the past few years, for my business that is mostly about renovating or restoring houses and reselling them (not flipping - this work takes time), I’ve used a Python library I wrote myself to handle accounting. It was basically made up mostly of stuff I had, with a few new things added in.
I would like to switch over to GnuCash. Luckily, since I’m at a slow point and
between projects, I can do that without worrying about converting old data for
older LLCs and projects.
There’s one issue I’m not sure can be handled by GnuCash, so I’d like to find
out about it before trying to switch over.
I use a line of credit. Luckily the interest rate is basically constant. (There’s a
slight flux, but not much.) The problem is its compounded and, of course, every time I
withdraw money from the credit line or pay any back, the principal amount changes. I’m
hoping, at this point, people are saying, "Oh, yeah, just do this…."
But just in case there’s a need for clarification, if I withdraw $50,000 to
purchase a house on January 1, then, on the 15th, withdraw $10,000 for roofing
work, need to figure out the total owed to that credit line on 1/31, and the
interest rate is 3%, then I have to figure compound interest on $50,000 at 3%
from 1/1 to 1/15. Then I have to add $10,000 to that amount to calculate the
interest on the $50,000 plus 15 days of interest, plus $10,000, plus the
interest from the 15th to the 30th, at 3%, to get a clear number for what I owe.
Can I have this done automatically on an account? If not, how can I easily
keep track of this in GnuCash?
Thank you!
Hal
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