Skip to content
×
PRO
Pro Members Get Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
$0
TODAY
$69.00/month when billed monthly.
$32.50/month when billed annually.
7 day free trial. Cancel anytime
Already a Pro Member? Sign in here

Join Over 3 Million Real Estate Investors

Create a free BiggerPockets account to comment, participate, and connect with over 3 million real estate investors.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
The community here is like my own little personal real estate army that I can depend upon to help me through ANY problems I come across.
General Real Estate Investing
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated 9 months ago,

User Stats

8
Posts
3
Votes

What is real net worth when on investment properties?

Javier Carrizosa
Posted

So the main definition of net worth to my knowledge is, after selling all assets minus liabilities you get your net worth. 
I believe a lot of times when we try and do a quick net worth calculation for an investment property we think, 

Example:
Rental A it’s worth 200k, I bought it at 100k and own 80k. So it would seem my net worth is 120k right? But isn’t that really wrong?

If on average, selling a property costs about 8% So then we would have:

200k-8% = 184k - 80 (mortgage) = 104k

But, let’s say the property was a long term holding so capital gains taxes due on it are 15% (assuming no state taxes in Florida  

So our capital gain was 100k and 15% is 15k due in taxes!

So we have a networth so far of:

104k - 15k = 89k

But, we depreciated the property for 2 years at 3.7k/yr total 7.4K taxable amount  which we would owe about 1.8k at 25% tax rate (I might be off a bit here and there)

Final total net worth from what we thought it was 120k now is 87.1k which is a big difference!

Is this something most of us neglect or do not think about?

On my spreadsheets I’ve always deducted 8% (sell costs)  from the actual equity on my properties but I haven’t thought about all the grainy details until now!

What do you guys think as far as calculating net worth on investment properties?

Loading replies...