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MS Money (UK) ver 14 - Moving home RRS feed

  • Question

  • Hi Guys

    I've moved home and I'm in a mess with trying to record it in MS Money.

    The elements are...

    1. Increase in value of my old home (I've done this by going to the asset account, and clicking update current value and giving the increase value the date of the sale

    2. Selling the old home, repaying the old mortgage and transferring the remaining equity balance out.

    I went to the FAQ page: http://money.mvps.org/faq/article/461.aspx

    It talks about going to the asset account and creating a withdrawal transaction with the category principal transfer. I simply can't do that. In the asset account's register I only have the options to 'increase', 'decrease' and 'transfer'. (To be clear my account here is of type "Asset" and subtype "House".) In transfer I can select an account to transfer the selling price to but there is no option for the mortgage account. As a guess I chose to transfer the amount to my solicitors client account (which reflects the reality of what happened. Then from the solicitor's client account I set up a loan repayment transaction to the morgage account. That squared the solicitor's client account leaving me with a balance to reflect my equity in the property which felt right.

    3. Buying the new home, setting up the new mortgage to part fund it.

    I've really got into a mess here. I created my new Asset Account of subtype House. The FAQ article http://money.mvps.org/faq/article/460.aspx talks about creating a 'Loan principal received' transaction to the asset account. I don't see that option anywhere.

    Am I looking at the wrong FAQs here? Is the process different as I am using the UK version of MS Money? I would be very grateful for any help you can give as I can't see how to record these transactions.

    Many thanks

     

    David Burr

    Wednesday, June 2, 2010 10:48 PM

Answers

  • It does sound like you are on the right track and I'd forgotten that there was a predefined category for the "income".

    In a tax man sense, the cash from the mortgage is not income. In an accounting sense it is. It's cash flow in your direction. Now, also in an accounting sense, it's instantly offset by a corresponding liability. Net you got no richer because the income less the liability equals zero change.

    There are lots of ways to do this and no one right one. My basic approach os to create a transaction that has split elements for the expenses associated with buying the house and the actual purchase price as a transfer to the asset account. These expenses and one transfer are offset by the "income" of the loan you took out. There are even ways to coerce Money into transferring this money from the liability--working around the problem you cite--but I don't think they are worth the trouble. I'd just enter a note into the memo of this "income" to note that it's really the proceeds of the Loan Account just for completeness and clarity. This transaction typically still takes money out of the account you enter it in after all of the splits are added up. This is typically the money you bring to closing. 

    • Marked as answer by Brave Druid Saturday, June 5, 2010 9:17 AM
    Friday, June 4, 2010 3:15 AM
    Moderator

All replies

  • Not entirely sure what issue you are seeing, but beware: in lots of these transactions, the transaction pulldowns do not offer the full range of possible choices. In many cases you may need to type out what you want instead of depending on the pulldown choices. If you are using Transaction Forms, you may want to change to direct register entry.

    As to Transfer:Loan Account, IIRC, this you cannot do directly somewhere before or at M05. You have to start by creating a Loan Payment:Loan Account and then just delete everything but the Principa Transfer element and use it instead.

    Oh, and "Loan Prinicpal Received" is not a pre-defined type of transaction or category. It's an Income Category you will need to define for Money. Then you just enter the transaction in the asset register for that category and, voila, you have an increase in the account balance/the asset value. Not sure what Glyn's FAQ says on the subject, but generally I'd consider this Income as part of the transaction that purchases the house, not as income that contributes to the house's asset value.

    You might want to see http://umpmfaq.info/faqdb.php?cat=23 for more sample cases and possible insight.

    Thursday, June 3, 2010 12:39 PM
    Moderator
  • Oh, and "Loan Prinicpal Received" is not a pre-defined type of transaction or category. It's an Income Category you will need to define for Money. Then you just enter the transaction in the asset register for that category and, voila, you have an increase in the account balance/the asset value. Not sure what Glyn's FAQ says on the subject, but generally I'd consider this Income as part of the transaction that purchases the house, not as income that contributes to the house's asset value.

    Thanks very much Dick. I'm almost there now. The only bit I'm stuck on is the bit I've quoted above.

    I now have all the balances correct except I have a negative balance in the account that bought the property to the same value as the mortgage advance. I'm confused how I should address that.

    I understand that you say I should create an income transaction into that account but surely a mortgage advance isn't income and this would misstate my income for the year. Intuitively I would have wanted to create a transfer from the mortgage account to the account that I made the purchase from for the value of the mortgage advance. However, the mortgage account seems to start with the negative value of the value of the mortgage advance so I can't log a transfer transaction from there or I will be double mortgaged!.

    Sorry if I'm making this more complicated that it needs to be.

    Many thanks

    David

    Thursday, June 3, 2010 7:34 PM
  • Ahhh I've found it. There is an income category called "Other Income : Loan Principal Received".

    So I've used that and I'll filter it out of the income report that I use.

    Sorry for wasting your time and thanks very much for your help.

    Thursday, June 3, 2010 7:38 PM
  • It does sound like you are on the right track and I'd forgotten that there was a predefined category for the "income".

    In a tax man sense, the cash from the mortgage is not income. In an accounting sense it is. It's cash flow in your direction. Now, also in an accounting sense, it's instantly offset by a corresponding liability. Net you got no richer because the income less the liability equals zero change.

    There are lots of ways to do this and no one right one. My basic approach os to create a transaction that has split elements for the expenses associated with buying the house and the actual purchase price as a transfer to the asset account. These expenses and one transfer are offset by the "income" of the loan you took out. There are even ways to coerce Money into transferring this money from the liability--working around the problem you cite--but I don't think they are worth the trouble. I'd just enter a note into the memo of this "income" to note that it's really the proceeds of the Loan Account just for completeness and clarity. This transaction typically still takes money out of the account you enter it in after all of the splits are added up. This is typically the money you bring to closing. 

    • Marked as answer by Brave Druid Saturday, June 5, 2010 9:17 AM
    Friday, June 4, 2010 3:15 AM
    Moderator
  • Thanks very much Dick. Thanks for taking the time.
    Saturday, June 5, 2010 9:18 AM