Many are under a fallacy that owning just one home is an asset, this cannot be farther from the truth and as a matter of fact could be one of the biggest liabilities ever if your financial obligations are not in order.
Before we delve any further it is important to understand what assets and liabilities are.
An asset is what brings money in and a liability takes money out. So let’s take for example you own a property outright which means there’s no mortgage on the property, you are still liable for the day to day costs of running the property i.e. property taxes (similar to council tax in the U.K.), water rates, heating, repairs and all the expenses that may be needed.
Owning just one home becomes somewhat of an asset when it is sold and not before. Any profits made from when the property was purchased to when it is sold is known as capital gains, this may be subject to a different tax bracket known as the capital gains tax.
It is important when you plan to own a property, make it part of the plan to own two just so the other property will generate income.
If your intentions is to own just one, it may pay more to look into renting where you are not liable to anything substantial with regards to the property and invest you money in stocks and shares.