Though your mortgage payment for your property is one big lump sum per month, it’s composed of several pieces that need to be booked separately. But not all of these pieces are deductible from your tax liability. Let’s break down each component and show you how to account for your monthly mortgage payments with Azibo.
On your monthly mortgage statement, you can find several buckets that your payment actually contributed to:
This payment reduces your mortgage balance and increases your equity. It affects the Balance sheet and Cash Flow statement, but isn’t included in the P&L or Schedule E because it’s not an expense.
In Azibo, this piece of your mortgage payment should be split from the original transaction and tagged as “Mortgages & Loans > Mortgage Principal.”
This is the amount paid to your lender in exchange for giving you a loan. It counts as an expense in the P&L, Cash Flow, and Balance Sheet, and is also part of your Schedule E.
In Azibo, this piece of your mortgage payment should be split from the original transaction and tagged as “Mortgages & Loans > Mortgage Interest.”
Your statement may also include escrow line items as part of your mortgage payment.In Azibo, you can split escrow from the original transaction and tag it as “Mortgages & Loans > Escrow.”
Azibo helps you stay organized so you’ll have a much clearer picture of your cash flow and expenses. By using our split transaction tools, you’ll be able to create accurate reports that you (and your CPA) will love.
Disclaimer: This content has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for accounting or tax advice.