In this work, a real time home power management (RTHPM) scheme and the corresponding rule based control algorithm (RTHPM algorithm) are presented. The proposed system produces a real time solution to reduce the electricity cost and to avoid the high peak demand problem simultaneously for a Smart Home (SH) which is equipped with smart electrical appliances, power units (photovoltaic system, grid, battery), communication network and a Main Controller (MC). In RTHPM system, power unit(s) are prioritized due to their current status and tariff rates. When the prioritized power units cannot provide the home power demand within the predefined grid limits and efficient battery usage rules, MC interferes with the status of appliances as much as it is permitted. The simulation test results show that the proposed RTHPM system significantly reduces the electricity cost and high peak demand. (C) 2015 Elsevier B.V. All rights reserved.