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Determining the equity in your home

Dear Dr. Don,
I want to know, how do I find out how much equity I have put into my house?
-- Roxanne Requests

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Dear Roxanne,
You can look at this from a couple of perspectives: a net-worth perspective or a tax perspective.

A net-worth perspective looks at the value of what you own, less the amount you owe, so the equity you have in your home is the difference between the home's market, or appraised, value and the remaining balance on any outstanding mortgage debt.

Most people have a pretty good sense of what their house is worth without doing too much research. Looking at the closing prices of houses sold in your neighborhood that are comparable to yours is a good place to start. You can use an online service provided by Bankrate called Home Gain, but in my neighborhood I seem to get something in the mail every couple of weeks from helpful real estate agents telling me what's sold in my area over the past couple of years.

From a tax perspective, you would consider your basis in the property and add to that any capital improvements made to the property. IRS Publication 551, Basis of Assets, discuss this approach to valuing your equity. You're looking to determine your capital gain or loss if you were to sell the property. The Bankrate feature, "Capital gains tax break is a boon for most owners," has more information about the capital gain implications of selling your home to realize the equity you have in the property.

Bankrate.com's corrections policy
-- Posted: Oct. 4, 2005
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Home Equity
Compare today's rates
NATIONAL OVERNIGHT AVERAGES
$30K HELOC 4.30%
$50K HELOC 3.96%
$30K Home equity loan 4.99%
Rates may include points
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