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An aerial view shows land beneath a cliffside luxury lakehouse that collapsed under the Texas property into the water below. With the owner's permission, building crews set fire to the house on Friday. (Brandon Wade/Reuters)

Building crews set fire on Friday to a luxury lake house left dangling about 23 metres on a decaying cliff that has been giving way underneath the structure.

Live video showed the house being set on fire by work crews, who earlier had placed hay bales soaked in fuel inside the $800,000 house on Lake Whitney, about 120 kilometres southwest of Dallas, and broke windows for proper ventilation.

'You're like, 'Good grief, that is my home.''- Home owner Rob Webb

The land started to give way in February, and since then about 50 yards of land that separated it from the water's edge has eroded, said Mark Wilson, the chief deputy for the Hill County Sheriff's Department.

On Tuesday, a large chunk of the land under the structure collapsed, leaving about half of the house on the ground and half in the air.

The burn, which was authorized by the homeowner, will be carefully monitored and comes after a demolition of the house was seen as too risky due to the unstable ground underneath, officials said.

Owner Rob Webb, who spent his retirement savings on the house, has abandoned the property. He told Dallas television station WFAA he had trouble recognizing the structure from news reports.

"You're like, 'Good grief, that is my home,'" Webb told WFAA.