Final answer:
The value of your property after accounting for depreciation is the actual cash value or depreciated value. Equity is calculated by subtracting outstanding loans from the property's market value. Home equity is a major financial asset for many homeowners.
Step-by-step explanation:
The value of your property, based on the current cost to replace it minus depreciation, is often referred to as the property's actual cash value or depreciated value. This is different from the market value or the replacement cost, which does not account for depreciation. To calculate owner's equity, you subtract any outstanding loans from the property's market value, which gives you the net value you would have in your hands if you were to sell the property. For instance, if a property's market value is $250,000 and you have an outstanding loan balance of $100,000, your equity would be $150,000. Home equity is a significant financial asset for many homeowners, and the total value of all home equity held by U.S. households was a sizeable $23.6 trillion as of mid-2021.