Your Home, Asset or Liability

[maat55]

Just wondering how many out there think your home is an asset. I personally believe that it is a liability. Like many, I always thought it was the common mans largest asset. But after reading Rich Dad Poor Dad it got me thinking.

What is the total costs of a home from start to finish after you paying interest, insurance, repairs, taxes, remodels etc. Also, how you buy it makes a big difference too. 30 year or 15 or even 10 year notes change the numbers drastically. To me, some of us make bad deals on homes just like we buy over priced cars. Why are some of us frugal about buying cars by paying cash and buying used, but we will get the biggest house we can on a 30 year note?

I guess that our home is the one thing we will buy with little thought of frugalness. After learning what I have learned about personal finance the last few months, to me, my home is just a place to eat and sleep on the way to becoming financially secure.

Like most people, I would like to have a nice home, but not as much as I want financial peace. I would like to get the peace then buy the house, instead of the other way around.

I'll stop rambling again and will be interested in hearing what you think.

[Joan.of.the.Arch]

My house is the building on my garden plot, so I live in it. I don't think of it as an asset, because I don't think I can ever expect to sell it and downsize for cash out. It costs less than a studio apartment, even when taking taxes into consideration. It is not a liability because I do not put much into it, really. I'm okay to live with it as is and will never do major remodeling of my 1910er. Oh there is another building on my garden plot. It was a large, two car, separate garage, but it was taking up too much garden space so I demolished part of it and put a large grape arbor in its place. Now it is a small two car garage which stores computers stuff and garden tools. These pesky buildings!

[Caoineag]

I never understood people buying the biggest home they could "afford" on a 30 year note either. To me, a house is just a place to sleep and have a garden and yard. Owning a house costs lots of money, but so can renting. Personally I would like to be able to fix things when they break instead of waiting months for furnace control or hot water.

But then I love to travel so why would I sink a lot of money into a place I hope to abandon often?

[disneysteve]

I count my house as a liability. On my spreadsheet, I include the loan balance that we owe. I do not include the equity that we have. I also do not include the home's value in any retirement planning.

It is expensive to own and maintain a home: taxes, insurance, utilities, maintenance, repairs, furnishings, etc. A home is an expense.

[Reldon]

I consider my house an asset. The reason I say that is because the current mortgage I am paying right now would probably be the same amount I would be paying if I were to rent a place to live. Besides the taxes and insurance, which I calculate into my yearly budget, I am ok with what I am paying monthly.

[poundcakes]

Ours is an asset to us because it is paid for.That has given us some financial peace because we have upkeep, but no house payment or rent.

[feh]

I don't think one's home can be labeled as simply an asset or a liability. It is a collection of both.

Its value is definitely an asset, even if it's not liquid. I think it should be counted as such.

There are many liabilities associated with a house, such as mortgage balance, taxes, maintenance, utilities, etc.

[momof1in150]

I look at a home as an investment. It is also a tax write off. If you are able to buy a 2nd home for investment (rental) then it is truly a tax write off because you are able to write off 100% of taxes and interest. Your first home you only write off above the standard deduction which you get whether you itemize or not.

[LivingAlmostLarge]

Liability. BUT we own because of non-tangile value we get from owning. Not moving, being able to keep dogs, etc.

Read millionaire mommy next door, she rents and explains why.

[jIM_Ohio]

It is both.

If you owe, clearly a liability.
If you own it free and clear, it is one of the most illiquid assets a person has, but it is an asset (by a financial definition).

[disneysteve]

I look at a home as an investment.

Investment and Asset are two different things.

An asset is something that has value. So yes, a home is an asset in that sense.

An investment is something I purchase with the intent or expectation of making money on it. I don't consider my home to be an investment. Whether the value rises, falls or stays the same, I'm not selling it. It wasn't purchased in order to make money. It was purchased to have a place to live and a place to keep our stuff (any George Carlin fans?).

[aida2003]

I think I'm in between: neither an asset nor a liability. Maybe tilting towards 'assets'.
I do not include our house in our retirement planning, though I've listed the balance of the mortgage on 'the whole picture' of our finances. So the mortgage balance is clearly a liability right now that will hopefully go away within a year: planning to pay it off early.
When we decide to sell it, I'm sure we won't profit from it. We'll be lucky if we break even considering insurance, taxes, maintenance, future carpet replacement and painting, etc.
On the other hand, after the mortgage is paid off, we'll be living 'rent free', so the house becomes a sort of an asset.

Anyway, I'm not like a majority of people who enjoy painting, decorating, furnishing their houses. Ours is very plain and half empty. I see it as a shelter to sleep-in. No sense to paint interior for the next 5 years since we'll be having two little kids. Now DD has done some 'art' on the walls in the living room and kitchen.

[Ima saver]

My home is an asset because I have always owned my houses free and clear the past 30 years. I do have to pay taxes and insurance on it and that runs $3000 a year, but I could not rent for $3000 a year.

[Seeker]

My Home is an asset. But not everyone stays in one place for 15+ years; and if you move regularly (or if you have to be mobile because of employment), then a home can be a liability.

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Just subtracting the monies I would have had to pay to someone else (renting) over the years....

From the amounts that I have paid for the mortgage + property taxes + maintenance + insurance (etc) over the many years that it has been in my name....

And adding the amount that it has raised in "value" or equity...

I've gained more by "buying" than I ever could have by "renting."

---

My home will never fall below what I paid for it and even if it does, I still gain, because all these years I would have been paying rent instead. So even if I sell at what I paid, I'd would have had "free rent" or use of the property, instead of paying it to someone else.

[maat55]

Investment and Asset are two different things.

An asset is something that has value. So yes, a home is an asset in that sense.

An investment is something I purchase with the intent or expectation of making money on it. I don't consider my home to be an investment. Whether the value rises, falls or stays the same, I'm not selling it. It wasn't purchased in order to make money. It was purchased to have a place to live and a place to keep our stuff (any George Carlin fans?).

When I think of George Carlin, I remember his thought about tomato's.