Hello all. I would like to track property assets in kmm. They often increase/decrease in value. I have created asset accounts and enter amounts for increase and decrease by entering a “balance adjustment” type transaction. My question is what type of category should be used?
Thanks.
It really depends on your needs - there is no single “correct” way. You can use any categories you want, but I would consider how these will be reported at the end of the year (especially if the reports will help you prepare to file your taxes.) You can use different categories for the increases and decreases, or a single category, with positive and negative amounts. However, I would not do it this way, as these categories represent income and expenses, which are not what is happening to an asset simply changing it’s value. I would treat this type of asset like a stock, where you hold one share, and the current value is just that. You adjust the current value, by updating the price of that security. An alternative would be to use a value of $1 and then use “add shares” and “remove shares” to adjust the value, but it simply depens on your mental model of the situation, and what you want to see in reports over time.
Thank you for your suggestions. I will re-examination my options on this.
Typically you do not “realize” those increases or decreases until you sell the property.
If you want to track the appreciation and depreciation these are usually set up as Asset accounts for appreciation/depreciation.
Total asset value will consist of:
Original Asset purchase value
- Appreciation Asset Account (unrealized)
- Depreciation Asset Account (unrealized)
Total: Asset current value
They are not usually set up as income or expense accounts(categories) as the value is not yet realized. Usually will only be realized when the property undergoes an evaluation or transactional process. Like a refinance, sell of the property, donation or a property is inherited and the Cost Basis is reevaluated.
GnuCash has some interesting information( have not read it all and I am not sure how old it is): Depreciation and Capital Gains