Should You Count Your Home in Your Net Worth?

Yes, your home belongs in your net worth. You own it (or part of it), it has a market value, and you could sell it. Leaving it out would understate what you're worth, often by a lot.

But a home is different from a savings account, and treating them the same way leads to a misleading number. Two habits fix that: value the home conservatively, and keep a second figure without it.

How to include it

Put the home on the asset side at its current market value, meaning what it would realistically sell for today, not what you paid. Put the remaining mortgage balance on the liability side.

Example: a flat worth 400,000 with 260,000 left on the mortgage adds 140,000 to your net worth. That 140,000 is your equity.

Don't subtract the mortgage from the property value and enter only the difference. Keeping both lines separate shows you how the debt shrinks over time, which is one of the most satisfying things to watch in a net worth chart.

Estimating the value

Nobody knows the exact value of a home until it sells, so aim for a sensible estimate:

• Look at recent sale prices of similar homes nearby, not asking prices, which tend to be higher.
• Use an online valuation tool if one exists in your country, as one input among several.
• If you bought recently, the purchase price is a reasonable starting point.
• Update once a year. Property doesn't need monthly attention.

When in doubt, round down. An overstated home value makes everything else look better than it is.

Selling costs

Turning a home into cash costs money: agent fees, legal and notary costs, taxes in some countries, sometimes an early repayment fee on the mortgage. Together these can easily reach several percent of the price. Some people subtract an estimate of these costs from the home's value to get a more honest figure. It's optional, but it's a good habit if your home is a large part of your net worth.

Why track a second number without the home

You can't pay for groceries with a kitchen, and you usually won't sell your home to fund your retirement unless you plan to downsize. That's why it helps to track:

1. Total net worth, including the home.
2. Net worth excluding your main home (sometimes called liquid or investable net worth).

The second number is what matters for things like your FIRE number or how long you could live without a salary. It's also more stable. House prices can move a lot on paper without changing your day-to-day life.

What about rental property?

A property you rent out is closer to an investment. Count it at market value, count its mortgage, and include it in your investable net worth, since it produces income and you could sell it without needing to move.

Common mistakes

The most common one is using the purchase price forever. After ten years it can be far off in either direction.

Forgetting the mortgage happens more than you'd think, especially when the loan sits with a different bank. Renovations get overcounted too: a 30,000 kitchen doesn't add 30,000 to the sale price.

And if the home is abroad, value it in its local currency and let your tracker convert. (More on currencies.)

Try it

The net worth calculator has separate lines for property and the mortgage, so you can see both figures in a minute. In NetWorthy you can add your home at your own estimate, track the mortgage against it, and update the value whenever you learn more.