Comments on: A House is an Asset http://www.investingintelligently.com/2006/03/29/a-house-is-an-asset/ Not just another (Canadian) financial blog Tue, 16 Mar 2010 09:07:43 +0000 http://wordpress.org/?v=abc By: Dave http://www.investingintelligently.com/2006/03/29/a-house-is-an-asset/#comment-273 Dave Sat, 15 Apr 2006 18:54:27 +0000 http://www.investingintelligently.com/2006/03/29/a-house-is-an-asset/#comment-273 Sorry Doug that is flat out wrong. Saying that because "your house creates expenses, you should consider it a liability" is ridiculous. Gold bars create expenses as well as I need some place to store them, preferably in some secure storage that will cost money. By your logic a gold bar is a liability. I do not even want to try to defend the statement that a gold bar is a liability. If you want to get technical, every expense could technically be paid from an accounts payable (which is a liability) which is then paid off from an asset (cash). So these expenses are liabilities but the house isn't. Sorry Doug that is flat out wrong. Saying that because “your house creates expenses, you should consider it a liability” is ridiculous.

Gold bars create expenses as well as I need some place to store them, preferably in some secure storage that will cost money. By your logic a gold bar is a liability. I do not even want to try to defend the statement that a gold bar is a liability.

If you want to get technical, every expense could technically be paid from an accounts payable (which is a liability) which is then paid off from an asset (cash). So these expenses are liabilities but the house isn’t.

]]> By: Doug Pedersen http://www.investingintelligently.com/2006/03/29/a-house-is-an-asset/#comment-272 Doug Pedersen Sat, 15 Apr 2006 02:32:31 +0000 http://www.investingintelligently.com/2006/03/29/a-house-is-an-asset/#comment-272 It costs money to live in your house, even if your mortgage (your *financial* liability) is zero. This is because, like food, water and other basic necessities, housing is not free. You should see yourself as a consumer of housing. Since your house creates expenses, you should consider it a liability, even though it has value. The problem is, if you realize this value, you now need to pay for somewhere else to live. I suppose it could also be considered an expense, like rent. It costs money to live in your house, even if your mortgage (your *financial* liability) is zero. This is because, like food, water and other basic necessities, housing is not free. You should see yourself as a consumer of housing. Since your house creates expenses, you should consider it a liability, even though it has value. The problem is, if you realize this value, you now need to pay for somewhere else to live. I suppose it could also be considered an expense, like rent.

]]> By: Prasanth http://www.investingintelligently.com/2006/03/29/a-house-is-an-asset/#comment-249 Prasanth Thu, 30 Mar 2006 09:17:07 +0000 http://www.investingintelligently.com/2006/03/29/a-house-is-an-asset/#comment-249 As long as i'm going to live in the house i own, even if its is mortgage free, the house is an asset with zero value. After all, i do need a house to live in. On the other hand, if i own another property, then it is an asset with some value. As long as i’m going to live in the house i own, even if its is mortgage free, the house is an asset with zero value. After all, i do need a house to live in. On the other hand, if i own another property, then it is an asset with some value.

]]> By: DIY Finances » Blog Archive » The Asset with Liability Written All Over it http://www.investingintelligently.com/2006/03/29/a-house-is-an-asset/#comment-248 DIY Finances » Blog Archive » The Asset with Liability Written All Over it Thu, 30 Mar 2006 01:57:44 +0000 http://www.investingintelligently.com/2006/03/29/a-house-is-an-asset/#comment-248 [...] There is quite the debate (Canadian Capitalist and InvestingIntelligently) going on about whether or not your primary residence is an asset or a liability. [...] [...] There is quite the debate (Canadian Capitalist and InvestingIntelligently) going on about whether or not your primary residence is an asset or a liability. [...]

]]> By: Canadian Capitalist http://www.investingintelligently.com/2006/03/29/a-house-is-an-asset/#comment-247 Canadian Capitalist Wed, 29 Mar 2006 20:47:27 +0000 http://www.investingintelligently.com/2006/03/29/a-house-is-an-asset/#comment-247 Of course, a house is an asset. Anything that can be converted to cash (sooner or later) is an asset. In my post I am simply pointing out that when people argue that it is a liability, they forget to take the imputed rent into account. Of course, a house is an asset. Anything that can be converted to cash (sooner or later) is an asset. In my post I am simply pointing out that when people argue that it is a liability, they forget to take the imputed rent into account.

]]> By: tonekoffski http://www.investingintelligently.com/2006/03/29/a-house-is-an-asset/#comment-246 tonekoffski Wed, 29 Mar 2006 16:24:16 +0000 http://www.investingintelligently.com/2006/03/29/a-house-is-an-asset/#comment-246 "If I have a personal residence that costs $1 million but will rent for only $1,000 a month, should it be counted as an asset worth $1 million?" Where's the confusion here? Of course it should be counted as an asset. Only the corresponding mortgage is a liability. Why would the fact that you are collecting $1000 rental income per month change whether or not you classify your house as an asset? Your house is an asset (fixed asset); the $1000 rental income is an asset (cash); and your mortgage is a liability (long-term liability). “If I have a personal residence that costs $1 million but will rent for only $1,000 a month, should it be counted as an asset worth $1 million?”

Where’s the confusion here? Of course it should be counted as an asset. Only the corresponding mortgage is a liability.

Why would the fact that you are collecting $1000 rental income per month change whether or not you classify your house as an asset? Your house is an asset (fixed asset); the $1000 rental income is an asset (cash); and your mortgage is a liability (long-term liability).

]]> By: 0xCC http://www.investingintelligently.com/2006/03/29/a-house-is-an-asset/#comment-244 0xCC Wed, 29 Mar 2006 12:53:03 +0000 http://www.investingintelligently.com/2006/03/29/a-house-is-an-asset/#comment-244 What if you were to sell that $1 million house and then turn around and rent it from the buyer for $1000 a month? What if you were to sell that $1 million house and then turn around and rent it from the buyer for $1000 a month?

]]> By: Canadian Capitalist http://www.investingintelligently.com/2006/03/29/a-house-is-an-asset/#comment-243 Canadian Capitalist Wed, 29 Mar 2006 12:14:47 +0000 http://www.investingintelligently.com/2006/03/29/a-house-is-an-asset/#comment-243 Like I mention in my post, many people fail to account for the value that they derive from the personal residence. But the liability argument side does have a point. If I have a personal residence that costs $1 million but will rent for only $1,000 a month, should it be counted as an asset worth $1 million? Like I mention in my post, many people fail to account for the value that they derive from the personal residence. But the liability argument side does have a point. If I have a personal residence that costs $1 million but will rent for only $1,000 a month, should it be counted as an asset worth $1 million?

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