Is My House an Asset or Liability?

You are so happy, you have bought land and make your house. Did you ask one question from yourself anytime

Is My House an Asset or Liability?

It is sure, your mind will say to you. My house is of Rs. 20 Lakh and I can sell it. So, it is  my asset. I am saving of rent. So, it is my asset.

But I am saying, you are total zero marks in Accounting.

First again define the asset or liability

Asset which brings all time money and money in your pocket in the form of profit. 

Liability which carry money from your pocket and you get only loss. 

1st Logic is Wrong : You can Sell Your House and Earn Money

In current time, you did not sell your house and as per my thinking. No one sell his own house where he is living, his family is living. So, it is not source of your money or profit. So, it is not your earning.

2nd Logic is Wrong : You are saving Rent 

You have advance invested money in land and building on it. Suppose, it is Rs. 20 Lakh. Now, if you start any business on rented office and you can earn double of your per month rent. Tell me, you are saving your rent or you are depreciating your money.

3rd Logic in the Favor that Your House is Your Liability

1. You will Pay Annual Maintence Bill of Your Own House 

In maintence bill, you will pay

a) Saumosam to Your House. Its cost is based on how big is your house. Estimate Rs. 20000 to 30000 cost is of paint to your house. So, any liability will carry money from your pocket. So, this house is carry money from your pocket.

b) Time to time, your plastic pipe will dead and you have to get plumber for repair your pipes. Because plumber has completed plumbing course by study day and night and they are professional and your house is your liablity and your money will go out of your pocket due to your house liability.

c) You will Clean Your Toilet and You will buy harpic toilet Cleaner

2. You will Pay Petrol Bill or Transport Bill if there is Distance Between Your Office and House

If you have your own house and when you go to office, you will pay the bill of monthly petrol. Why because of your own house. What is the need of paying petrol or bus or train or Car bill. Because you do not leave your own house. Due to house, you did not get rented house near your office where you can save your transport or petrol cost. Come and Go on bike or car, you have to pay every month petrol and diseal. Petrol cost is Rs. 75 and diseal 60 + . Your house is carrying money from your pocket. So, it is your liability accept it. Did you account it. If your office is far from your house is just 12 kms, you have to ride your bike for 24 kms daily and if your bike is good average of 75 kms on one liter, it means, you have to pay Rs. 720 per month due to your own house.

3. You Have to Pay Your Electricity and Toilet Bill

Every month, you have to pay electricity and toilet bill whether you use or not because minimum is fixed as meter charges. It happens due to your own house. So, your house is carrying money from your pocket like loan is carrying money in the form of paid interest.

4. Your Have to Annual Property Tax

When you have bought you have paid property tax. After one year, you will again pay property tax. So, your house is your liability, because you are paying property tax and Tax money is just like interest on the debt which you have taken.

5. You have to Pay Bills for its Security

In night security guard duty, you have to his salary. You have to pay its lock bills. You have to buy locker inside it. So, you have to pay for this. All expenses are done due to your house. So, your house is carrying your pocket money. So, your house is your liability.

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Accounting Education: Is My House an Asset or Liability?
Is My House an Asset or Liability?
Accounting Education
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