I searched the forum for my issue, I may not know how to search efficiently by key words, but I haven’t found a response for my issue.
I have an active that I inherited (a house). I did not buy it, I only payed succession fees and taxes. How would I add this to my portfolio.
And a second issue, but one that I think is related, from time to time, some equity that I own, instead of paying dividends, they deliver "free shares from the capital increase.” (This typically refers to shares that are distributed to existing shareholders without additional cost, as part of a company’s capital increase.). How would I log these, as I did not buy them, they are rather a profit.
I added the house as a delivery inbound, with the added fees and taxes for the succession, but the program sees this with negative performance and IRR, because the real estate did not yet appreciate its value since I inherited it, but the fees and taxes count as an additional cost. It doesn’t know that I basically have plus value without actually paying for it.
Portfolio performance is not made to track real estate. It’s primary use is stocks and related stuff. You can massage it to track real estate, but to be honest that’s gonna be a pita.
In addition real estate needs very different tools in day to day life. And real estate doesn’t have nearly as much or accurate price points compared to exchange traded securities.
Bottom line: I think another tool would serve you better.
in both cases, house and shares do have a value even though you feel that you just got it from somewhere.
The difficulty with the house is to determine that value and the change of that value over time.
In general shares given to you can be treated as dividends. In that case you book a dividend followd by a purchase. However, such transactions should be reviewed on a case by case basis as slightly varying scenarios are possible (e.g. inboud delivery of shares only) but the new shares carry a value in any case.
Generally real-estate appreciation are measured at the Fair Market Value, or government declare the minimum value based on province or even city on which they charge stamp duty or transfer fees when one sale or purchase. Taking such market value or government defined value, one can manually update the property value every year, and that is how appreciation can be monitored. This is a generic way.
Thank you for all your answers. Maybe I stated my problem wrong… I have no issues on how to evaluate the real estate or how to track it from now on (be it capital appreciation or rent cash flow). My only problem is how I should log the initial transaction, the succession one.
I know the property value, but if I log it as a buy with that value, because of the fees and taxes I paid, the program shows me that I actually lost that money, with negative profit. But that is not realistic, because in reality my portfolio just grew with the value of the asset, regardless the fees and taxes paid.
If I log it as if I bought it for 0 (or rather 0.01 cause it would not allow me to put 0) then the program will calculate a huge profit in my portfolio, which is true but I don’t want that to mix in with my statistics, as it was an inheritance and not a profit that I made.
Does all this make sense?
Also the issue with the shares that I received instead of actual dividend are also something very similar that I need a solution for.
The property raises my overall portfolio value, that is not the issue.
But if I count the added value as profit, it is not realistic. What profit have I made?! Based on this “profit” my portfolio IRR for 2024 will be 50% which is not a realistic statistic.
It just so happens that I came in the possession of this capital, it is not the result of my investments, it is not the yield of my investments.
Exactly. Some ideas :
You can select ‘before tax’ data series. Taxes will then not be considered in IRR/TWR. But there is no ‘before fees’.
Do you want to track the performance all of your Assets together ? House + financial investment together ? Otherwise it is possible to separate their performance assessment by creating a filter including everything except the house.