Net equity
The net equity of a house or boat or vehicle is the amount of money that the owner can get from the sale of the item.
For example, where a client does not have a loan to help pay for a boat their net equity is the total amount of cash they could receive for the boat.
Where a person has a loan to help pay for an item then their net equity is the total value of the item minus the money they still owe on the item.
House and land
When assessing net equity on a house and/or land, use the rateable valuation or the amount insured. Use whichever value is the greater.
Example
House valued at | $100,000 |
Land valued at | $100,000 |
Total combined value | $200,000 |
Less outstanding Mortgage principal | $150,000 |
Net equity | $50,000 |
There will be some cases where District Councils only use the Capital value of a property which will be noted on the rate notice. In these instances the Capital value is the value of both the house and land value combined.
Example
Capital value | $200,000 |
Less outstanding Mortgage principal | $150,000 |
Net equity | $50,000 |
Boat or caravan
The value of leisure boats or caravans will be the insured value. Where the leisure boat or caravan is not insured, the client will be required to provide, and pay for, written verification of:
- the leisure boat's value from a boat dealer and/or
- the caravan's value from a caravan dealer
Example
Boat valued at | $10,000 |
Less outstanding loan on boat | $3,000 |
Net equity | $7,000 |
Vehicle
When assessing the net equity of a vehicle use the estimated value of the vehicle.
Example
Vehicle valued at | $15,000 |
Less outstanding loan on vehicle | $7,000 |
Net equity | $8,000 |
Exemption
The client can have the value of a motor vehicle excluded from their net equity if the motor vehicle is used for private use. For instance, if the need for the vehicle is to get to work, disability reasons or to take children to school, then the vehicle is not treated as an asset.
Client has more than one vehicle
When a client has more than one vehicle, you will need to assess whether the vehicles are used for private use.
Example
A family with 3 adults own 5 vehicles and all are claimed to be used for personal use. One is a vintage car used for Sunday outings and another a 4 wheel drive used on weekends only.
The 4 wheel drive and vintage car are additional to the needs of the family. Therefore, for Accommodation Supplement purposes, the net equity of these vehicles will need to be assessed.
For more information see:
