Schedule the future purchase of a home, property, or asset

You would enter and schedule the purchase of the new home (or any other type of property) on the Property/Assets screen.

If you are modelling the sale of one home and the purchase of another in the future (a downsize or upsize), then you might find the following videos helpful:





To schedule a future property purchase:

1. First, go to the Time screen and drag and drop an event to the timeline to schedule the future purchase. This event could be called "Purchase New Home" or "Downsize Home", depending on the scenario.

2. Next, schedule the future purchase of a home or other property on the Property / Assets screen.

3. On the People panel, select one or more owners for the property. If the property is co-owned by a client and his or her spouse or partner, select them both to indicate co-ownership.

4. Type - Select Primary Residence if this is to be you your client's future home.

5. Enter a Name for the property.

6. Enter the Market Value and Effective Purchase Value of the home.

- Market Value will be used as the purchase price of the home.

- Effective Purchase Value will be used to determine the cost basis for the property.

Market Value and Effective Purchase Value are used to calculate capital gains on properties and assets. These entries may be identical, especially on a future property purchase. Note that unlike other assets, primary residences are not subject to capital gains.

7. Be sure to tick the New Purchase? checkbox.

When selected, a purchase expense will be created automatically for the property at its scheduled purchase event (i.e. start event), which we will be selecting in a moment. This purchase can be fulfilled from cash and other available liquid assets, financed in whole or part using a linked mortgage, or possibly a combination of the two.

8. Expand Advanced Settings > Details.  

9. Set the Values calculation to Present Value or Future Value. This setting is especially relevant when scheduling a future purchase.

- Select Present Value (the default) if the purchase price is to be inflated until the year the property is bought. An Inflation Rate % will be applied to the property’s Market Value until its year of purchase.

If Present Value is selected, enter an Inflation Rate % in the field below. This rate will be used to inflate the Market Value and Effective Purchase Value annually until the home is purchased.  A negative value (e.g. -25) could be entered into this field to deflate the future purchase price and value of the home.

- Select Future Value if the purchase price is to be treated as a future amount.

When selected, an Inflation Rate will not be applied to the future purchase price of the property. The purchase price of the home will be the value as entered in the Market Value field.

If selecting Future Value is selected, simply leave the default Inflation Rate % as is. This rate will not be used to calculate the purchase price or value of the future home.

10. Enter a Growth/Depreciation Rate % for the property. This percentage will be used to grow or reduce the value of the property over the course of the planning timeline, once the property has been purchased. A negative value (e.g. -3) could be entered to calculate a depreciating property value.

Notice that the line graph at the bottom of the screen will adjust to show the trajectory of the property value as it is calculated using this rate.

11. Expand the Liquidation panel. Leave the default, "At End of Applied Timeline", selected. This is generally the recommended setting for a primary residence.

Next, schedule the purchase of the home.

12. Go to the Time panel located on the right side of screen. Select the Event tab.

13. Select a start event for the property. Select the "Purchase Home" event you added to the timeline at the start of these instructions. A green dot will appear next to the event, which schedules when the home will be purchased.

14. Next select the home’s end event. This selection sets when the property will be liquidated. A red dot will appear next to the selected event. If the home is to be held until the plan’s end, select the very last event in the timeline, the Mortality event.

The line graph will adjust, giving you a illustration of when the home will be purchased, its appreciation or deprecation thereafter, and the eventual liquidation of the property.

15. Click Add or Update to save these changes.

The property will be shown in the ledger on the right side of the screen.

Visit the Let's See charts. You should see a large spike in the black need line in the year of purchase.

Additional information is available in the linked videos.