This accounting rule summarizes related accounting treatments for home-related issues.
- Downpayment should be debited in the checking account and credited to the home value account.
- Total balance of mortgage should be credited to the home value account.
- Bonus from realtor should be counted as income as it adds to cash directly without impairing home equity.
Home Value Appreciation
- Home value appreciation should be accrued monthly.
- For 2003, monthly accrual of $400 will be made on the 1st day of October, November and December. This amount of monthly accrual represents annual home value appreciation of 1.52% ($400 * 12 / $315,000).
- For 2004, monthly accrual of $450 will be made on the 1st day of every month. This amount of monthly accrual represents annual home value appreciation of 1.71% ($450 * 12 / ($315,000 + $400 * 3)).
Home Maintenance Fund
- A monthly accrual will be made on 1st of every month to "Home Maintenance Fund" account. For 2003 and 2004, the amount will be $300/month. Month accrual amount in 2005 and forward will be decided in 2004.
- The account can be credited for any actual spending on major home maintenance jobs of more than $200. It can also be expensed to cover the deductible part of insurance claims.
- The outstanding balance of account should not exceed 2.5% of the home value.