Short answer
Property value is the estimated market value of the asset.
Equity is property value minus loans secured against it.
Net worth should reflect equity, not the property value by itself.
Practical overview
You want to stop property from making your balance sheet look bigger than your actual owner position.
Ask yourself
Would this number still make sense if I showed the loan beside it?
Watch out for
Using property value in one place and property equity somewhere else can double count wealth or hide leverage.
Try this
For each property, keep a mini equation: valuation source, property value, linked debt, offset cash, and estimated equity.
Property value is the asset side
Property value is an estimate of what the property could be worth in the market. It may come from comparable sales, a bank valuation, an agent appraisal, or an automated estimate.
Because property does not trade every day like a listed share, this number should be treated as an informed estimate rather than a precise live price.
Equity is the owner position
Equity is what remains after subtracting the loan balance from the property value. A property worth $900,000 with a $540,000 mortgage has $360,000 of equity before any transaction costs.
For net worth, equity is the number that matters most because the mortgage is a liability attached to the asset.
Avoid double counting
If you list the full property value as an asset, you also need to list the full mortgage as a liability. If you only list equity, do not list the mortgage again elsewhere.
Either method can work. The important thing is to avoid mixing methods across properties.
Common questions
Can equity be negative?
Yes. Negative equity happens when the loan balance is higher than the property value.
Is an offset account part of property equity?
An offset account is usually cash, not property equity. It may reduce interest charged on the loan, but it remains a cash asset unless it is used to repay debt.
Should property equity be tracked separately by property?
Yes. Separate tracking makes it easier to see concentration, debt exposure, and which assets are driving changes in net worth.
A calmer way to keep the picture together
WealthScout is being built to connect assets, liabilities, records, and net worth in one private view. These guides explain the thinking behind it.
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