The amount of equity you have depends on the context—whether it's equity in a business or home. Equity is generally calculated by subtracting liabilities from assets. For a business:
- Equity = Total Assets - Total Liabilities
This means you calculate your business's total resources (assets) and subtract all the amounts owed (liabilities). The remainder is your equity in the business.
For a home:
- Home Equity = Current Market Value of the Home - Outstanding Mortgage (and any other related loans)
This tells you how much of your home you actually own outright. If the market value of your home is higher than what you owe, the difference is your equity.
To determine exactly how much equity you have, gather information on your assets and liabilities if for a business, or your home's appraised value and mortgage balance if for a home. Subtract liabilities owed from assets or owed mortgage from home value to find your equity amount.
