Enter the current value of the asset or property and the purchase price of the asset or property into the calculator to determine the negative equity.

## Negative Equity Formula

The following formula is used to calculate negative equity.

E = TA – TL

• Where E is the negative equity (-\$)
• TA is the total asset value (\$)
• TL is the total liability value (\$)
• TL > TA

## Negative Equity Definition

What is negative equity? Negative equity is defined as the difference between the total asset value and total liability value when the liability is greater than the asset value. In other words, the point at which the difference becomes negative.

## Example Problem

How to calculate negative equity?

1. First, determine the liability value.

For this problem, a person had purchased a house in 2007, just before the crash from a total mortgage value of \$300,000.00

2. Next, determine the current asset value.

After the crash in 2008, the market price of the property drops to \$200,000.00.

3. Finally, calculate the negative equity.

Using the formula above, we find the negative equity to be -\$100,000.00.