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Graham_Devon

Wild_Rover wrote: »

Graham_Devon - some words of wisdom from my late father to back you up -

- something that costs a penny is too dear if you don't need it.

- for most folk golf clubs and cars aren't assets, and neither is a house. An asset puts money in your pocket, a liability takes it out.

At present, my house is a liability. I now have no mortgage but my house costs me money every month - insurance, council tax, maintenance etc. It will only be an asset if I sell it, and then I'll have to spend some or all of it to live somewhere else, or pay rent and my rental agreement become someone else's "asset".

Most "goods" are not assets as almost all of them are "worth" less as soon as you have bought them.

The asset/liability difference was a major aspect of the book "Rich Dad, Poor Dad". One of the things that helps keep poor people poor is that they don't know the difference between assets and liabilities, or if they do know the difference, they don't act accordingly. I wish I had recognised the difference years ago!

WR

Very good analogy and I agree completely.

What we have on this forum is people with BTL's, Holiday homes and a dream. Most of them see their HOME as an asset.

You have the other side of the coin too. Those that see their home as a home. Something which without it, just as with food, you'd find it very difficult to live without. You'd find it very difficult to bring kids up without etc.

We all need somewhere to live. If we are going to claim that homes are assets as they give us somewhere to live, so are cars, as they give us a means to work, so is fuel as it gives up a means to run the car etc etc.

You can't claim only houses are assets. However, it usually comes down purely to your own viewpoint....but you don't go asset hunting. You don't get loans attaching themselves to your asset. You only get this in business.

james_toney

deleted message

IveSeenTheLight

Mernerva wrote: »

If you ask most people today what is their biggest asset, the owners would say their house, the renters would say their mind.

The owners are wrong of course as you say and as the Rich Dad books show. You have to pay property outgoings like insurance, council tax, maintenance etc. So it takes money out of your pocket not putting it in. Which makes owning your home a liability not an asset.

If you rent you get the owner of the property to pay all the outgoings insurance, maintenance etc. These days most renters get housing benefit because rents have been pushed so high and unless you are earning a lot, not many can afford these high rents out of earnings alone.

What will the future hold for rents only time will tell, but average earnings are going up less than inflation and there are some big cuts to housing/council tax benefit coming.

I have three BTL's which generate more rental income than the liabilities it costs (Mortgage interest, Factor Fee's, Buildings Insurance, Maintenance etc).
I also see these properties have on paper increased in value.

In your opinion, are these assets or liabilities?

IveSeenTheLight

Graham_Devon wrote: »

We all need somewhere to live. If we are going to claim that homes are assets as they give us somewhere to live, so are cars, as they give us a means to work, so is fuel as it gives up a means to run the car etc etc.

Assets are essential anything you own which has a value.
think of it as if you needed to sell something, what value would it attain.

Food (perishables) are not usually classed as an asset as they are usually consumed, else reduce their value as they near / pass their expiry date. Of course if your businessis in selling food, then the stock can be viewed as an asset (usually referred to as inventory).
For the everyday man it's not.

The same with fuel, it's generally consumed, very unlikely resold. Therefore it's not classed generally as an asset.

Liabilities is what you owe, so the house is an asset and the mortgage is a liability.

On a balance spreadsheet, the Assets must equal the liabilities

Thrugelmir

globalds wrote: »

Aren't the consequences the same ..

On output or the effective on the electorate?