Categorization question.

[Jeff Harris]

I just closed on a house today and entered it in Quicken using the method
described here
http://groups.google.com/group/alt.comp.software.financial.quicken/browse_frm/thread/640aff3484af6b5a/45ffa7aff37fe6ff?q=earnest+money&rnum=4#45ffa7aff37fe6ff

I have an item I'm not sure how to categorize. I received a credit for
$1,255.14 from the seller for County Taxes from 01/01/2005 - 09/26/2005.
This doesn't go into my escrow and it shouldn't count as taxes paid by me..
so how do I categorize it? Just make up a 'dummy' category for it?

Thanks,
Jeff

[Mortimer Schnerd, RN]

Jeff Harris wrote: I have an item I'm not sure how to categorize. I received a credit for $1,255.14 from the seller for County Taxes from 01/01/2005 - 09/26/2005. This doesn't go into my escrow and it shouldn't count as taxes paid by me.. so how do I categorize it? Just make up a 'dummy' category for it?

Are those taxes now payable by you? If they are, you should put the credit in
the category you'll be paying them out from. It's just a credit rather than a
debit. Later when you pay the taxes, it'll all work out.

If you're not liable for those taxes, the seller sold you the house for less, no
matter what he calls the credit. Adjust your liability accounts accordingly.




--
Mortimer Schnerd, RN

mschnerd@carolina.rr.com.REMOVE

[JMC]

Mortimer Schnerd, RN wrote: Jeff Harris wrote: I have an item I'm not sure how to categorize. I received a credit for $1,255.14 from the seller for County Taxes from 01/01/2005 - 09/26/2005. This doesn't go into my escrow and it shouldn't count as taxes paid by me.. so how do I categorize it? Just make up a 'dummy' category for it? Are those taxes now payable by you? If they are, you should put the credit in the category you'll be paying them out from. It's just a credit rather than a debit. Later when you pay the taxes, it'll all work out.


Agree, the crdit should be categorized to your real estate taxes
category. This credit is likely a pro-rata share of the total annual
tax. When taxes come due, you will probably be liable for the full year
of taxes. The net cost to you will be the full amount less the credit.
The net will probably be tax deductible.

If you're not liable for those taxes, the seller sold you the house for less, no matter what he calls the credit. Adjust your liability accounts accordingly.

[Shorty]

You really need to examine your escrow statement to determine how to
deal with it. The seller probably accrued taxes on the property from
the lien date and the sale is probably before the payment due date.
When you pay the taxes you will have to pay the amount both the former
owner and you owe. The credit is to reimburse you for paying the
former owners share. You will be able to deduct for taxes the
difference between the total and what you were credited. So credit the
taxes in Quicken now, when you pay them all will be well.