Best practice for CAPEX that are financed

I recently had a two furnaces replaced at a property paid via credit card. I financed this purchased for two reasons: to pay via property cash flow and 18-months no interest.

What is the best way to enter this transaction? If I enter the CAPEX, I’m afraid the software will recognize it as one large negative cash flow in the month purchased; however, I will be making monthly payments over 18-months.

Any thoughts?

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I’m no accountant but I think of it as though you did have one big negative transaction for the month just because you financed it doesn’t really change what happened. As long as you don’t then also count each credit card payment against the property you aren’t double counting. Spreading out the expense might make monthly numbers look better but on yearly basis you are in roughly the same spot. Just my initial thought.

I agree–seems easier and simpler to just list it as a single line cash item under CapEx; how you pay it off on the backend doesn’t matter, the bill from the company is still the same whether you paid cash or put it on a credit card. Why are you afraid of the one-time negative cash flow in reporting? It will inevitably happen when large repairs or CapEx expenses happen.

Logging the expense as a single line item doesn’t take into account the interest that would be paid over the life of the loan. Are you suggesting that the total cost of the loan (interest and any fees) be included in the single upfront line item?

I think you can enter the purchase a single expense, then track the payments as transfers, and the interest would be tracked monthly under the interest category. If I am not mistaken, since it was for the house, the interest is deductible on your taxes (consult with your tax expert).