'Want it now brigade'

PoorDave

Jim_B wrote:

I disagree. I say you're paying interest because you couldn't afford to buy a house, so you had to get someone to loan you the money.

Plane Boy; an asset is something that puts money into your pocket. Unless you're renting one out, a house is not an assets but a liability.

I take your point.

What about a house as a geared investment where you can expose yourself (!) to the market at £100k (for rises or falls) but only have to pay £10k capital for the chance to do so? If it doubles to £200k you've made a shed-load for not much outlay, if it halves to £50k there are bridges to throw yourself from!

Jim_B_3

Mikeyorks wrote:

The Inheritance Tax legislation would disagree with you.

Doesn't make me wrong.

PoorDave

Jim_B wrote:

Doesn't make me wrong.

Damn this man's logic!

Jim_B_3

PoorDave wrote:

What about a house as a geared investment where you can expose yourself (!) to the market at £100k (for rises or falls) but only have to pay £10k capital for the chance to do so? If it doubles to £200k you've made a shed-load for not much outlay, if it halves to £50k there are bridges to throw yourself from!

Much like your own private hedge fund. Gulp!

Too rich for my blood, but if you're a high-stakes gambler I can see the excitement in doing so. At least the banks won't break your legs and chuck you off the bridge like 'Big Tony' would if you lost his 90k.

Mikeyorks

PoorDave wrote:

Damn this man's logic!

It's not logic .... it's one of your bridges!;)

Jim_B_3

PoorDave wrote:

Damn this man's logic!

The tax man is hardly likely to miss an opportunity to help himself. When inherited, it is an asset, as you have shelled out nothing and gained a house (someone has, in essence, put a house in your pocket). If you keep hold of it, though, it rapidly becomes a liability, as it will now start taking money out of your pocket.

If you paid for it yourself, you have swapped money for a house, breaking even for the first five seconds, and then the house starts taking money out of your pocket.


Nonetheless, I maintain that an asset puts money in your pocket, and a liability takes money out.

PoorDave

Jim_B wrote:

True though. The tax man is hardly likely to miss an opportunity to help himself. Nonetheless, I maintain that an asset puts money in your pocket, and a liability takes money out.

So when you buy a house you're paying interest for the chance to show all and sundry that the item you said was an asset turned out to be a liability?

Perhaps.

Are you saying an asset has to bring you "income" i.e. regular money in? Rather than a far off dreamworld capital gain

Gorgeous_George

Definitely an asset:

1. A useful or valuable quality, person, or thing; an advantage or resource: proved herself an asset to the company.
2. A valuable item that is owned.



GG

Jim_B_3

PoorDave wrote:

So when you buy a house you're paying interest for the chance to show all and sundry that the item you said was an asset turned out to be a liability?

Perhaps.

Are you saying an asset has to bring you "income" i.e. regular money in? Rather than a far off dreamworld capital gain

You're paying interest because you owe someone a lot of money, and they want interest as well as their money back. Ignore that for now, and assume you paid cash.

You now have a house. There are associated costs, and as such the house is a liability. A constant drain on your pocket.

To my mind, an asset is something that puts money into your pocket. If, at the end of everything you sell the house and tot up the totals and find that after all the outgoings you managed to make a profit, the house turned out to be an asset after all, so long as you managed to swallow the outgoings without going bankrupt/losing the house/etc.

I am uncomfortable withthe idea of labelling a house an asset whilst it's losing you money simply because you hope you can one day sell it for more than you paid for it. What would be a better term?

Can we liken it to a long, long spin on a roulette wheel, in which you have to constantly pay money out as the wheel spins?

Jim_B_3

Gorgeous_George wrote:

2. A valuable item that is owned.

If you live in your own house, you pay council tax/maintenance/etc.

Doesn't sound like value to me.

Note to people clutching their heads and screaming. Yes, renting a place to live in is also a liability. It turns out that wanting to stay alive turns out to be a liability. Such is life. Just because you own something other people would give you money for does not make it an asset to you.