Book value is the official value of a home or piece of real estate. The amount is based on the original cost of the property plus any improvements that have been made minus any depreciation. Say that you originally purchased your home 20 years ago for a steal. You paid $50,000 for the home, but it required a lot of work. The home was a wreck, and you had to redo the entire interior. In the end, you put $35,000 into the house to make it livable. As time goes by, the property no longer suits your needs. You decide to sell and talk to several real estate agents. As you are trying to develop the asking price, your Realtor tells you about the book value. You simply take your original purchase price, $50,000, and add the amount of improvements that you made, $35,000. This gives your home a book value of $85,000.
