Calculating net worth of real estate entails determining the difference between the property’s market value and any outstanding debt or liabilities. For instance, if a property is worth $250,000 and has a $150,000 mortgage, the net worth would be $100,000.
Understanding net worth is essential for financial planning, loan approvals, and tax purposes. Historically, tracking net worth gained prominence during the Great Depression, fostering prudent investment and wealth management practices.