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is your house an asset or a liability ?
an asset is defined as something which increases your net worth , puts money in your pocket
a liability is defined as something that takes out money from your pocket
so , the house in which you live in is a liability .. it takes money out of your pocket
- property taxes
- electricity bills
- mortgage payments / home loan payments
all of them take out money from your pocket
you might argue that the appreciation of the property is an asset . well , it’s not guaranteed. in the crisis of subprime mortgage crisis of 2008 , homes depreciated a lot due to oversupply of homes .
if you have bought a home and are renting it out to others , you will be getting some money in your pocket – again , there is a catch – the rental income should be more than the mortgage payments / home loan payments that you are making.