Home Equity Line of Credit

[CLLong]

I have a home equity line of credit. Initially I set it up as Loan and
Liability account. But now that I want to withdraw some money out of it, I
find I cant do that. So, I found an account type of Home Equity line of
Credit. I set that up and started to enter the information from the other
account then I found out I couldnt track interest and principal. It would
just subtract out the whole amount from the loan as opposed to just the
principal. I need some advice. Thanks in advance.

 

[Dick Watson]

Most people use the HELOC like a credit card. Expense interest transactions
from the statements. Transfer in payments.

Loan account types assume that you only get money once and pay fixed
payments for a fixed term.

 

[Payam Torab]

I have a problem in Money 2004 for the interest part on HELOC- I cannot
define it as tax-deductible. I define the category for interest as Loans:
Mortgage Interest, and still does not work- therefore, estimated tax
calculation is off. any thoughts?

Thanks,
Payam

 

[Dick Watson]

Have you checked category details for that category to make sure that it is
assigned to the right tax form lines? It needs to be set to Line 1098 home
mortgage interest (with form 1098). (BTW, mine's Interest Expense:Mortgage
Interest. Curiously, a new M05 file has NO category predefined for this. Boy
is M05 lame.)

 

[Frank A Spina]

Speaking of this. I'd love to be able to schedule a interest amount on the
balance of a account between days. Right now I just estimate and adjust it
after my statement comes out.

 

[Dick Watson]

I've long thought some Excel-like grammar for specifying scheduled amounts
as some function of the data or the phase of the moon or whatever would be a
Really Cool thing. Most Users Prefer(tm) dumbed down, so that's what we get
instead.

 

[Kevin Campbell]

I too am unable to get Money to recognize HELOC interest as tax-deductible
either. I've looked at all the settings I can think of including making
sure it's set to the right form, Line 1098 home mortgage interest (with form
1098). It still will NOT show up in the tax estimator under Mortgage
Interest. I end up going in and overriding Money's entry of 0 with an
estimate of the amount for the year.

Kevin

 

[Dick Watson]

I'll have to play around with this. Perhaps they only get the items for that
line from transactions that are Loan Payment? That would seem kinda stupid,
but not off-scale.

 

[Dick Watson]

So I just tried a testcase on a machine I don't normally use (in a version
of Money that shall go nameless).

New file.

Create one checking account, beginning balance $100.

Add one $10,000 transaction, category Interest Expense:Mortgage, assigned
the created category to category group Mortgage Interest.

Go to Tax Estimator. Go to Deductions. Go to Mortgage Interest. It's showing
$10,000 actual and a projection of $26,642.34. (How it predicted THAT with
not one scintilla of additional information in the file does make me wonder
a little.)

I didn't test this in M04 nor did I test it with a Credit Card style
account.

 

[Dick Watson]

I just tried a similar TC in M04.

Account type: Line of Credit, Credit Card. (I used financial institution bfd
bank, not listed. I told it the rate was 18% and the credit limit was
$10000000. Why not? I told it not to setup a bill and I pay the total amount
every month. I can't recall how much I told it I owed.)

Created the same category. Assigned Interest Expense to category group Other
Interest (can't remember what I did in the previous TC). Assigned
subcategory Mortgage to category group Mortgage Interest.

Tax Estimator shows $10,000 actual and a projection of $26,642.34. (It's
good to see that M04 and M-unnamed come out to the same number, goofy though
it may be. Maybe it is just taking an extrapolation based on the (number of
days until now)/365 * amount recorded up until now?)

I'm not sure why you and the OP are not seeing this? The category group
Mortgage Interest, maybe?!?

BTW, M04 doesn't offer up an "Not an expense" income category. However do
M04 users survive without this Great New Feature that surely Most Users
Prefer(tm)???

 

[Payam Torab]

Whatever it is , it is not working- try to associate the HELOC with a
property asset that has mortgage on it and see if it works- I suspect this
may be because there are two loans with mortaggae interest on the same
property.

Payam

 

[Kevin Campbell]

I tried this on my copy of Money 04. I created a new file, added a checking
account and a HELOC account with a CL of 300000 and a balance of 100000. I
then did a balance on that account and told it I had an interest charge of
300. That transaction was assigned to the Loans: Mortgage Interest
category. This category is assigned to the tax form Line 1098 home mortgage
interest (with form 1098). When I go to the Tax Estimator and look at the
Mortgage Interest deduction I correctly see the 300 interest. When I look
at the detail on that line item I see the Loans: Mortgage Interest category
listed. So it's working correctly.

However, in my actual money file with the same category setup the same way
and assigned to the Mortgage Interest line item in the Tax Estimator I see
$0.00 listed for interest. When I look at the detail for that item I see
the Loans: Mortgage Interest category listed, but it shows 0 transactions
even though if I go to that category I see all the correct transactions
listed for several years worth of data.

I thought at first it was because I wasn't actually using the Loan:Mortgage
Interest category. For some reason buried deep in the past I had setup a
Mortgage Interest sub-category under Bills instead of Loans. That is what I
had assigned all my mortgage interest transactions to and that category was
assigned to the correct tax form Line 1098 home mortgage interest (with form
1098). And that was the category that I was using in the Tax Estimator to
show me the interest. It was showing $0.00 in the Estimator as well. I
switched to using the Loans:Mortgage Interest category and added it to the
Tax Estimator Mortgage Interest detail but it also shows $0.00 for
transactions even though there are transactions assigned to that category.

Not sure what to do next!

Kevin

I tried changing my mortgage payments to use the

 

[Dick Watson]

The only thing I note from your post is that you didn't mention category
group Mortgage Interest as being the category group for the subcategory in
question. I have no clue if this is relevant--if it is, it would make the
first use of any consequence for Category Group--I just noticed you didn't
mention it.

 

[Kevin Campbell]

Yes, the Category Group for both subcategories is Mortgage Interest.

Kevin

 

[Dick Watson]

I'm tapped out for ideas. Have you tried going into the detailed
transactions in Tax Estimator and "adding" your category?

 

[Kevin Campbell]

Yes, both of those categories, Bills:Mortgage Interest and Loans:Mortgage
Interest, are listed in the details of the Tax Estimator. The problem is
that in those details both of those categories show 0 transactions
associated with them. If I go to the actual category itself it shows
several years worth of transactions, but when I look under the details of
the Tax Estimator it shows 0.

Back a couple of year's ago, before I moved my mortgage to a HELOC account
and I had a traditional mortgage account the interest transactions
associated with that account (same category as now) DID show up under the
Tax Estimator. It's only since I closed that traditional mortgage account
and opened an HELOC account that the transactions don't show up.

Kevin

 

[Dick Watson]

What happens if you reopen the closed loan account?

 

[Kevin Campbell]

Don't know! I'll have to check that out.

Kevin

What happens if you reopen the closed loan account?