When you are in a legal partnership, there usually comes a stage where a list of all possessions must be accounted for. This typically entails all assets owned by either spouse, which is formed into a list to create an asset assessment. Moreover, the asset assessment will decide for both, precisely how much each partner can keep and what assets to sell. However, seeing as there are numerous factors that can influence such a decision, a number of things must be taken into account. Here is what you need to know about when to sell, and when to keep.
What are Assets?
First of all, it is important to fully understand what an asset is, and the things that can influence yours. An asset is an item of value, usually a property, which can be used to meet debts or commitments. They can either be tangible or intangible and are characterized by the ability to produce value. Furthermore, the ownership of an asset has the value added to an individual’s or entity’s worth, seeing as they can be converted into cash.
Assets will either appreciate or depreciate in value. This will depend on many things, which includes the current state of the market, as well as the type of asset. When an asset is subject to depreciation, this will not only affect the value of your property, but also determine the amount of the asset’s value which can be used as a tax write-off. Moreover, regardless of your decision to sell or keep an asset, you should always strive to sell it for no less than the fair market value.
When to Keep
Since assets are scarcely devoid of emotional or sentimental attachment, letting go can be hard. Fortunately, there are certain situations and circumstances that allow you to keep the assets, even if only just for a while longer. With that said, here is when you can keep your assets.
● Assets Appreciate
Assets typically appreciate in value. This is true for houses, gold, and certain stocks. Depending on how well you protect your assets, they will react to the current market conditions accordingly. If you feel optimistic, then you should hold onto your assets for just a while longer. When the time comes, you may relish in the extra profit you make.
● When You Need a Loan
The sale of an asset can often take too long, contrary to loans, which are almost always quick. However, some loans will require collateral, which is where an asset comes in. The asset can decide how large your loan is. This is useful when you are unable to make ends meet every month.
● When It Generates Profit
When an asset generates profit, it is usually found ‘ill-advised’ to sell it. This is simply because your current value remains unchanged, while your cash grows steadily. Moreover, the appreciation of your asset will also enhance your value with time, which can increase your profit when the time to sell comes.
When to Sell
Sometimes, the choice of selling an asset will present itself to you, regardless of your current state of financial self-sufficiency. However, there are times where you may find yourself forced to sell an asset, such as when you have a major life event coming up. This is usually due to your immediate need for cash. Should this be the case, remember to strive to achieve fair market value. With that said, here is what you need to know for when to sell an asset.
● Divorce
According to statistics, nearly 45 percent of marriages end up in divorce. This is, in fact, one of the most common reasons for selling a home, in Houston and across the US in general. Since the process of divorce usually determines the allocation of assets, where it is split evenly, this can be hard with certain things. Even though said times can be bittersweet, it is often a requirement that must be fulfilled, as this is the best way to split the value in two.
● Does Not Generate Enough Profit
Many people often look to employ their assets to generate a passive source of income. The most common type involves renting real estate. However, its amount of activity is found to be on the high end, if not the highest. This is usually fine, but seeing as other sources of passive income could be generating more, many people will choose to give up a rental property.
● Supply Increases
When the supply of an asset increases, this usually brings with it pricing pressure. However, there are stipulations, including growth in income and a higher employability rate in the area. When this happens, you should look to sell before the large supply is noticed, and the markets enforce pricing pressure.
The question of when to keep and when to sell has many people sent into a spiral of confusion. However, there is no right or wrong answer, only a better approach towards handling your possessions. That said, it really depends on your circumstances and if you absolutely need that extra cash or not. Moreover, seeing as an asset can be subject to high tax rates, sometimes selling it is a wiser decision.
