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What Is My Property Worth?

By: Carlton Johnson


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The property market in the UK is currently on uneasy ground with know one really knowing what is going to happen next and with many people speculating that we are going to be entering some sort of recession, the question, what is my property worth, is a particularly poignant one. Most people would still consider their home to be the biggest asset they own. Yet, is their home really an asset at all?

For a long time, nobody has questioned the validity of the statement that their home is an asset. Perhaps we as homeowners have been too quick to accept this statement without truly understanding what an asset is. To fully understand what an asset is in relation to property it may help to understand that an asset, in property terms, is often linked to what is known as good debt, once we understand what good debt is and its relationship with assets it will help us to have a better understanding of what true assets really are.

So, what is good debt?

Good debt is debt that you have incurred by purchasing something that appreciates in value and/or can provide you with passive income that pays for itself, and doesn't need you constantly putting money into it. Even better still, as well as paying for itself and often appreciating in value, good debt can sometimes put money in your pocket in the here and now. In short good debt normally comes about when you have purchased a true asset, which is a product or service that meets the description above.

In this vein, your home could not be classed as an asset, because you live there and you have to pay the mortgage yourself through other means i.e. through working at your job for a wage to pay the mortgage or through the money you get from other assets. And even if you have paid off the mortgage, you would still have things to pay on the house, such as utility bills, taxes, repairs etc. So you will always need to have some income from some other means in order to finance the upkeep on your home.

However, many would still class their house as an asset because they think that whenever they want to they can release equity or sell up and move on after having made a huge profit? This theory appears logical enough, yet what has to be understood is that while this sleeping asset appreciates in value, so are the other sleeping assets (houses) around it so when you want to sell and move else where, even though you may be able to sell it for much more than you bought it for, you will not be able to cash this amount in as the likelihood is that wherever you are moving to will also have increased in value by a similar amount.

The only way you will truly be able to realise the value of your property is to either move to a smaller or less expensive property, remortgage and use the equity to invest in assets that will appreciate greater than your property, or when you die and meet your maker and leave the house to a loved one, however this third option is very drastic and I would not recommend it to anyone. As well as you not being around to enjoy the fruits of your labour, the tax man might be only too eager to grab his chunk of your property pie even before your loved ones have got their hands on it.

Article Source: http://depositarticles.com/

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