Is a Primary Residence an Asset?

If a residential property appreciates in value each year, it’s an asset when it’s sold. But can a home, the day after it’s purchased, be considered an asset if it’s also a primary residence?

Industry players say yes. Nationally, residential property values are growing at an average of 8% to 10% a year. This means that even if it’s a geared investment, it can be sold for at least as much, but likely more, than the original price paid.

“For a primary residence, a home being an asset is dependent on whether the value of the property is appreciating or depreciating,” says Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa. “This will be determined by several factors, such as the market, growth in the area and demand for property in that area. In terms of a second or investment property, whether or not it is an asset will be based on whether it is generating an income.”

“I believe a home is generally an asset from the second you receive the title deed, whether the property is bonded or not,” says Lew Geffen, chairman of Lew Geffen Sotheby’s International Realty. He says the only rider to a property’s being an asset from the outset would be having to spend substantial amounts of money on making it structurally sound. The golden rules when buying are: do your homework on the area and look at past performance.

 

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Rona Bekker

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