Net worth question

[RickTayz]

Quick question: if I co own a property (worth 300k) with my partner (we each own 50%), but only my name is on the mortgage (240k balance), how would I include this asset and liability in my net worth statement?

Also, how would my partner account for this in his net worth statement?

Thanks a bunch

[Singuy]

If your partner legally(on the deed) own 50% of 300k, and you have all the liabilities, than his net worth is 150k and yours is -90k.

[RickTayz]

Thanks for the quick response. Is it not odd that my partner automatically accounts for a 150k increase in his net worth when the house is still mostly not even paid off and still mostly owned by the bank? I guess what I'm asking is is that the best way to account for it?

[RickTayz]

Additionally, what if my partner were to informally pay for half of the mortgage payments - would he then include half of the liability as his?

[Singuy]

Oh sorry he has 50% of the equity, while you are entitled to 50% of the equity as well. So his NW is 30k and your net worth is technically -210k.

[Singuy]

Additionally, what if my partner were to informally pay for half of the mortgage payments - would he then include half of the liability as his?

He is not legally bound to include it in his net worth calculation for loan purposes.

[RickTayz]

Oh sorry he has 50% of the equity, while you are entitled to 50% of the equity as well. So his NW is 30k and your net worth is technically -210k.

In that case are you not calculating my net worth as equity - liability, when in reality net worth is assets - liability?

Also, this is for my personal tracking of my net worth, not for loan purposes. Sorry for not mentioning that earlier. Would that make a difference?

[Singuy]

You know what, you are right. Must be late for me so I don't know what I was thinking.

Yes your net worth is the equity in the house itself so should be 30k, while your partner has 30k as well.

[RickTayz]

So there is no difference in our net worths even though I am paying the entire liability and he is not?

[disneysteve]

The replies so far are confusing and contradicting one another so let's start fresh.

You and your partner both have your names on the deed to the house, so you each own a 50% interest in the property.

The property is worth 300K minus a 240K mortgage, so there is 60K of equity. Half of that equity, or 30K, belongs to each of you.

The mortgage is held by you alone. So you are 240K in debt. Your partner owes nothing.

So simply looking at net worth, your partner has 30K in assets and 0 in liabilities.
You have 30K in assets and 240K in liabilities. So his net worth is +30K and yours is -210K.

It makes no difference if he is paying toward the mortgage or not because the loan is not in his name. He could walk away from it at any time with zero consequences.

[Singuy]

Steve, that was what threw me off. Technically his net worth shouldn't be -210 because the value of the house is 300k, and 240k is owed.

I don't think we can treat the liabilities of a house the same as liabilities of student loans since one actually is worth - liabilities.

So I think his net worth is 50% of the equity, which is 30k.

When you do net worth calculation with a house included, you put the worth of the house under assets, and the mortgage owed under liabilities. You don't put the equity of the house under assets.

[disneysteve]

When you do net worth calculation with a house included, you put the worth of the house under assets, and the mortgage owed under liabilities. You don't put the equity of the house under assets.

Ah, okay then.

In that case, OP, you have 150K in assets (half of the home's value) and 240K in debt, so a net worth of -90K.

Your partner has 150K in assets and zero debt, so a net worth of 150K.

If the home was sold tomorrow, you'd need to give your partner half of the proceeds but you'd still be on the hook for the mortgage.

That's a pretty lousy deal, by the way.

[MonkeyMama]

Asset minus liability = net worth.

The partner had $150,000 asset (1/2 house)

OP has -$90,000 net worth. $150k asset minus $240k liability

$150k Partner - $90k OP = $60K Total Equity

(Edited to add: I guess I posted at the same time as DisneySteve).

[rennigade]

OP the next time you want to partner up and buy a house let me know. We can also go 50/50. You make 100% of the payments and ill own 50% of the house.

[Petunia 100]

Ah, okay then.

In that case, OP, you have 150K in assets (half of the home's value) and 240K in debt, so a net worth of -90K.

Your partner has 150K in assets and zero debt, so a net worth of 150K.

If the home was sold tomorrow, you'd need to give your partner half of the proceeds but you'd still be on the hook for the mortgage.

That's a pretty lousy deal, by the way.

Except the mortgagor is going to be paid in full, while OP and partner split what is left. Irrespective of the name on the mortgage, the mortgagor is not going to release interest in the property without being paid in full.