Offset Account Law and Legal Definition

An offset account is one of two accounts that reduces the gross amount of another account and strikes a balance between each account to arrive at a net balance. It is a separate savings account or ledger account that has a corresponding account which it will be canceled against when the books are closed. A savings account linked to a mortgage in a manner that the interest earned on a savings account is used to reduce the interest of mortgage is an offset account. Other examples of offset accounts are accumulated depreciation and discount on note payable.