the equity in your home
I want to know, how do I find out how much equity
I have put into my house?
-- Roxanne Requests
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
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.