Poll: Is Your House an Asset or Liability?

Is Your House an Asset or Liability?

  • Asset

    Votes: 4 80.0%

  • Liability

    Votes: 1 20.0%
  • Total voters
    5
web730

web730

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Just am curious how many people in this forum know the answer.

Is Your House an Asset or Liability?

1. Asset

2. Liability
 
Asset ..how can a house be a liability?
 
It can be a liability if it has a habit of killing people.... :ugh3:

No, seriously, what is the poster smoking? Houses, unless you can't afford them, are a complete benefit to your bottom line because in the end, you own it, whereas you rent, you basically throw away your money.
 
If you still owe mortgage payments,
then that's a Liability.. BUT, if you already
finished all of your mortgage payments
paid in full amount with the Zero balance
then that's an Asset. Correct ugh ?
 
Y said:
If you still owe mortgage payments,
then that's a Liability.. BUT, if you already
finished all of your mortgage payments
paid in full amount with the Zero balance
then that's an Asset. Correct ugh ?
Click to expand...

Ok got it! Yea, that makes sense. Thanks
 
GalaxyAngel said:
Both anyway
Click to expand...
I agree.

Someday, if we sell the house and make a profit (after expenses), then it's an asset.

Living in and enjoying our house is a benefit.

But when we have to repair something, it seems like a liability.

Need new roof, new windows, new bathroom, new floors, new furnace, etc.--endless money pit. Ugh!

But I love my house! :P
 
Reba said:
I agree.

Someday, if we sell the house and make a profit (after expenses), then it's an asset.

Living in and enjoying our house is a benefit.

But when we have to repair something, it seems like a liability.

Need new roof, new windows, new bathroom, new floors, new furnace, etc.--endless money pit. Ugh!

But I love my house! :P
Click to expand...

My husband and I want to buy a house. I want to buy a house now but he said we need to wait until our finances are better cuz he doesnt want to be "house-broke". Now, that I think about it..we are better off renting this townhouse at such a very very low price (for this area espeically) and just save our money for a house in a few years. If we buy now, the house would be a huge liability for us due to the high costs of houses here in MD. Also, we dont have to worry about spending money on repairs in this house. There are pros and cons.
 
Y said:
If you still owe mortgage payments,
then that's a Liability.. BUT, if you already
finished all of your mortgage payments
paid in full amount with the Zero balance
then that's an Asset. Correct ugh ?
Click to expand...

I believe most houses are always an asset. For example, I still have a mortgage on the house I paid 165K for but it's current market value is very close to 500K. Plus, tax laws allow owners, after figuring cost basis, up to 500K profit without owing any taxes. This is the most basic & simplistic view....
 
Tousi said:
I believe most houses are always an asset. For example, I still have a mortgage on the house I paid 165K for but it's current market value is very close to 500K. Plus, tax laws allow owners, after figuring cost basis, up to 500K profit without owing any taxes. This is the most basic & simplistic view....
Click to expand...

Yep, this does apply, too... However, IF the market value
went down (no profit) then that's a Liability...
BUT, you already have its market value higher than
what you paid for (some profit) which become an Asset.
 
Y said:
Yep, this does apply, too... However, IF the market value
went down (no profit) then that's a Liability...
BUT, you already have its market value higher than
what you paid for (some profit) which become an Asset.
Click to expand...

Yes, the scenario you present does happen at times and if you are ambitious and opportunistic, you could pick up some property that is devalued for whatever reason and after a little TLC, you can turn around and sell it for a profit but that is another story, another topic.
 
I told my husband that I dont mind flipping houses as an income. Ha! Maybe when we are retired.

Land is becoming scarce here in MD. Cant imagine the cost of land must be now.
 
Thanks for replying and voting.. but it only received three poll votes including mine (one vote) so far so I will leave it on till more poll votes come, then I will answer and say why so. It has only been more than a day since this posted.

Come on, people to answer which one you think which it's the true answer for the house.. an asset or liability. And please feel free to say why you answer is, but you don't have to answer why but free to vote otherwise. Fair enough?!

It's a rather important tip that many people need to know and learn something. I rather have at least 30 poll votes or more then I will answer mine.. but the more the better. It will get more interesting soon enough, trust me.
 
The house is an asset.

The mortgage is a liability.
 
Y said:
If you still owe mortgage payments,
then that's a Liability.. BUT, if you already
finished all of your mortgage payments
paid in full amount with the Zero balance
then that's an Asset. Correct ugh ?
Click to expand...

No, if that was true, then we'd pretty much all be liabilities!

Houses are assets. You OWN the house. You just have to pay the mortgage, which is a debt/liability. If you do not pay the debt, it's pretty ironclad that the mortgage holder (most likely a bank) will be able to seize the house to pay the debt. But that's not a liability, because as you put in money, your debt gets smaller -- unlike a car which has a value that goes down as time goes by, or renting in which your debt doesn't get smaller.

There are reasons why people don't buy houses -- sometimes it's CHEAPER to pay a little rent to save up for a bigger down payment so that the MONTHLY mortgage debt is smaller, but that's not making the house a liability.

A liability is a harm to you. If you can't afford the monthly payment, then you'd be better off selling the house, but a real liability is a house that you have to fix or else you die. A house with a broken gas line is a real liability.
 
Reba said:
The house is an asset.

The mortgage is a liability.
Click to expand...

And BINGO was his name-o. ;) Reba said it all.

In accounting, we look at a famous equation:

Assets = Liabilities + Owner's Equity

Rearrange:

Equity = Assets - Liabilities

And voila. How much "profit" you get from the house is the value of the house (asset) minus the cost of the house and its maintenance (liability). Nifty!



(There's a bunch of extra economic theory about utility (how you value the house beyond its cost) and opportunity cost, but I won't bore you all with that :))
 
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