There has been a bit of a debate happening lately in the finance blogging world. This debate centers around whether or not a home used for a primary residence is an investment. Some argue that because you get some return on the home, and because it appreciates in value, a primary residence is an investment. Others argue that since the interest you pay is likely to exceed any sort of return you get, and that if you make home improvements you aren’t really substantially improving your chances of return, a primary residence is just a large purchase — more of an act of consumption.

In the end, it depends on what you get for your home, and how you feel about it. Personally, I am inclined to view my home as a large purchase. Sure, I’ll end up (theoretically) with a chunk of cash when I sell, and the home has appreciated in value since I bought it. But I don’t think that what I get in monetary terms is going to end up as a net gain. (So I guess maybe it’s a poor investment, but still an investment?)

However, there are other benefits that come with owning a home and improving it. We are making it a beautiful place to live, by doing the yard. We can hang whatever pictures we want because it is our home. And it is nice to have a stable place that our son can grow up in. So, while I don’t really think of my home as an investment, I do think it is a worthwhile purchase. And it is nice to get the tax deduction on the interest.

What do you think? Is your home an investment or a purchase?