Home an asset or liability?

[rhetoricalphd]

I want to calculate my net worth but I am reading conflicting ideas of whether to categorize my home (with a remaining mortgage of $158,000) an asset or liability. Any consensus?

Not sure if it matters, but I rent my home out and I live in an apartment. Thanks in advance for the discussion.

[wjcalderon]

It's both if you have a mortgage.

The market value of the home is an asset and the mortgage owed is a liability.

[TBH]

I rent my home out and I live in an apartment. Thanks in advance for the discussion.

In that case, I would treat it like an investment property. Count the value of the home as an asset, and count the mortgage as a liability. The net amount added to your net worth is the equity you have in the house.

I actually count my primary home in my net worth calculations too, but I don't count my car or any personal belongings.

[anaidaa]

A true investment asset produces income and generates positive cash flow. If your real estate purchase is costing you more money than it's earning, it's a liability. Another common and easiest ways to consider your home an asset, is to check if it's value appreciating.

[jackmiller]

I a liability until it is creates value greater than the costs you are putting in to it. Pretty simple really.

[disneysteve]

Some of you are confusing "asset" with "investment".

Your house is an asset. It is a tangible item that has monetary value.

Whether or not your primary residence is an investment is a totally different discussion that we've had here periodically.

[jackmiller]

Yes Disney but it is totally illiquid and for that I think it should be classified as an "asset".

[disneysteve]

Yes Disney but it is totally illiquid and for that I think it should be classified as an "asset".

Liquidity doesn't define an asset. Value does.

[jackmiller]

Bottom line. Don't commit a huge percentage of your income to buying an "asset" that may turn out to be a liability.

[disneysteve]

OP, your net worth is your assets minus your liabilities. The value of your home is an asset. The balance of the mortgage is a liability. Just the same as the value of your car is an asset. Any outstanding loan on that car is a liability. There there will be assets that have no corresponding liability - like stocks and mutual funds, as well as liabilities that have no corresponding assets - like student loans or medical debt.

[rhetoricalphd]

OP, your net worth is your assets minus your liabilities. The value of your home is an asset. The balance of the mortgage is a liability. Just the same as the value of your car is an asset. Any outstanding loan on that car is a liability. There there will be assets that have no corresponding liability - like stocks and mutual funds, as well as liabilities that have no corresponding assets - like student loans or medical debt.

Got it. Makes sense. Thanks!