Should You Include Your Home in Your Net Worth?

For most homeowners, their primary residence is the single largest item on their balance sheet. Which raises an obvious question: should you include it when calculating your net worth?

The short answer is yes — but with context. Here's how to think about it.

The Technical Answer: Yes, Include It

Net worth is total assets minus total liabilities. Your home is an asset. Your mortgage is a liability. Both belong in the calculation.

To account for your home properly, you need two numbers:

1. Current market value: what the home would sell for today (less selling costs, if you want to be precise)
2. Outstanding mortgage balance: what you still owe the lender

The difference — home equity — is what adds to your net worth. If your home is worth $600,000 and you owe $400,000, your home equity is $200,000.

This is the clean, technically correct version of the calculation. Most financial professionals use it, and it's the definition you'll find in any textbook.

The More Honest Answer: It Depends on What You're Measuring

Net worth as a concept is designed to help you understand your financial position. And your primary residence has a quirk that most assets don't: you can't spend it without displacing yourself.

That distinction matters more the more you dig in. Consider these scenarios:

Scenario 1: You plan to stay in the house

If you intend to live in your home indefinitely and never cash out the equity, then including it in your net worth is technically accurate but practically misleading. The equity isn't liquid. You can't use it to fund retirement without selling or borrowing against it. And if you sell, you need somewhere else to live — likely costing you something comparable.

This doesn't mean you should exclude it — just that you should keep in mind it's not the same as a brokerage account.

Scenario 2: You might downsize

If you plan to eventually sell and move somewhere cheaper — a smaller city, a smaller home, a country with a lower cost of living — then the difference in housing costs is real money that will eventually be available to you. In this case, including home equity makes perfect sense.

Scenario 3: You own real estate as an investment

Rental properties and investment real estate are unambiguously assets — they generate income and have liquidation value. Include them fully. The primary residence debate doesn't apply here.

Liquid vs. Illiquid Net Worth

One useful approach: track your net worth in two buckets.

Total net worth includes everything — home equity, retirement accounts, illiquid private investments, real estate, the whole picture. This is your true financial position.

Liquid net worthexcludes illiquid assets: real estate, home equity, restricted stock, private equity, and anything else you couldn't convert to cash within 30–90 days. This tells you what you actually have available without disrupting your life.

Both numbers are useful. Total net worth tells you how wealthy you are. Liquid net worth tells you how much financial flexibility you actually have.

How to Value Your Home

This is the practical challenge. A few approaches:

• Zillow / Zestimate / Redfin estimate: Free and easy, but can be off by 5–15% in either direction. Good enough for periodic tracking.
• Recent comparable sales: Look at what similar homes in your neighborhood sold for in the past 3–6 months. More accurate than automated estimates.
• Professional appraisal: The most accurate, but expensive ($300–$500) and unnecessary for personal net worth tracking.
• Conservative self-estimate:Many people prefer to use a number they're confident the home would sell for, not the optimistic ceiling.

Update the estimate once or twice a year, or when there's been meaningful movement in your local market. Daily precision is overkill for an illiquid asset.

Should You Subtract Selling Costs?

When you sell a home, you typically pay 4–6% in agent commissions, closing costs, and transaction fees. Some people subtract these from their home's value to get a more conservative equity figure.

For casual net worth tracking, this probably isn't worth the effort. But if you're doing financial planning around a specific anticipated home sale, accounting for selling costs gives you a more realistic number.

The Bottom Line

Include your home in your net worth — but label it clearly as an illiquid asset, note the home equity separately from liquid investments, and remember that the number only matters if you're eventually planning to tap it.

Tools like AssetLedger let you add real estate as a distinct asset class with its own valuation history. You can track market value updates over time, see your home equity trend alongside your mortgage paydown, and keep it clearly separated from your liquid financial assets — all in one place.

The goal isn't to inflate your number. It's to have an accurate picture. Including your home accurately — with both the asset and the liability — gives you that.