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don64
December 21, 2020
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Hello, how do I categorize a mortgage payment amount in QBSE? The payment is a lump sum which includes the mortgage interest and principal

  • December 21, 2020
  • 1 reply
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I know that only the mortgage interest is deductible so I am not sure whether or not I need to split it somehow. There is a way to split between business and personal but this does not really fit the bill because the mortgage payment is for my residential house which also happens to have my home office. I intend to itemize my deductions at the end of this year. So, any help or guidance would be much appreciated. Please keep in mind that I am working with Quickbooks Self-Employed which does not have Chart of Accounts or whatever that was discussed in other posts. Thanks.
Best answer by don64

Dear Mary,

 

Thanks for your answer. However, it does not fully address the question and deviates into the discussion of a home office which was not part of the question, though, it is good to know and is indirectly relevant.

 

Having extensively discussed it with multiple QBSE agents, we finally figured it out. A home mortgage payment can be split into three parts or categories in QBSE: 1. Mortgage, 2. Mortgage interest and 3. Property Tax (home office). When TurboTax becomes available, one can itemize mortgage related expenses so that they are factored in as deductions. At least, this is how I see it and how to accomplish as such.

 

Hopefully, this might be useful for someone to know.

 

Good luck with the tax season!

 

Don.

1 reply

MaryLurleenM
MaryLurleenM
December 21, 2020

Hello there, don64,

 

You can split the payment and use the correct category for the transaction. For example, the mortgage interest amount is deductible. Then, the mortgage principal is not.

 

Have you also set up the home office in QBSE? If not, here's how:

  1. In QuickBooks Self-Employed, go to the Taxes menu.
  2. Select the Annual tab.
  3. Select the Home office expenses section.
  4. Select Add a home office or Current home office if you already entered the square footage.
  5. Select a tax year.
  6. Select the Simplified method or Regular method tab.
  7. Enter your estimated home office square footage.
  8. When you're done, select Save.

Here's an article to learn more: Categorize home office expenses and enter square footage in QuickBooks Self-Employed.

 

Also, I recommend checking with an accountant to make sure you're recording this correctly. 

 

Let me know if you have other questions.

    D
    don64AuthorAnswer
    December 24, 2020

    Dear Mary,

     

    Thanks for your answer. However, it does not fully address the question and deviates into the discussion of a home office which was not part of the question, though, it is good to know and is indirectly relevant.

     

    Having extensively discussed it with multiple QBSE agents, we finally figured it out. A home mortgage payment can be split into three parts or categories in QBSE: 1. Mortgage, 2. Mortgage interest and 3. Property Tax (home office). When TurboTax becomes available, one can itemize mortgage related expenses so that they are factored in as deductions. At least, this is how I see it and how to accomplish as such.

     

    Hopefully, this might be useful for someone to know.

     

    Good luck with the tax season!

     

    Don.

    H
    hhrvqrj
    October 15, 2024

    That's all well and good. His problem is one level more complex than mine (since I don't have a home office). I didn't think about the property tax aspect but mine is escrowed too. 

    But how can this be automated? 

    I booked it to mortgage payment (gross) under expense and I plan to true it up at the end of year when I get my mortgage statements. 

    Nobody wants to do this every month manually lol but there's no other way (short of a lookup table or a mortgage calculator function plus wrapper algorithm) to know what should be allocated to P and I and so on.

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