Net equity
Net equity in a property is considered in the asset test when a deceased person who is single with no surviving children owned their own house or when a deceased person (with or without a surviving partner or children) owned more than 1 house.
The net equity of a house is the amount of money the owner would get from the sale of the property.
For example, where a person owned their home and had a mortgage, the net equity is the total value of the home minus the mortgage owing.
If a person did not have a mortgage the net equity is the total amount of money they could get for the property.
House and land
When assessing the net equity of a house and/or land, use the rateable valuation or the amount insured, whichever value is greater.
Note If the property is jointly owned with another person and is being passed to the surviving owner it will not form part of the deceased person's estate.
Example
House valued at | $300,000 |
Land valued at | $400,000 |
Total combined value | $700,000 |
Less outstanding Mortgage principal | $150,000 |
Net equity | $550,000 |
In some cases Councils use the Capital value of a property which will be noted on the rate notice. Capital value is the value of both the house and land value combined.
Example
Capital value | $700,000 |
Less outstanding Mortgage principal | $150,000 |
Net equity | $550,000 |
Secondary property
If a deceased person with a surviving partner or surviving children, had 2 properties that they resided in equally, MSD will determine which house was the primary place of residence in order to assess the deceased's assessable estate.
To determine which property is the primary place of residence, consider what their primary residential address was for electoral rolls, vehicle registration, dentist, health practitioner, lawyer, council rates etc.
