# JSA: Two Rental Properties One negative equity.



## adamany (23 Apr 2012)

Hi, here's a question I would be very grateful for a definitive answer on. I am unemployed and I have two rental properties. One has a mortgage that exceeds its value by far. The other is mortgage free. If I were to be means tested for JBA would the negative equity on the first offset/reduce the value of the second in the calculations? The social welfare web sites don't encompass the idea of more than one NPPR but somewhere I saw that perhaps a mortgage can only be offset agianst the property it's registered against. Thanks in advance..


----------



## Bronte (24 Apr 2012)

My understanding of the rules is that you have one PPR (principal private residence) and that is not counted in your means. The other property (investment property) would then be assessed, they have a formula on the social welfare website for this. 

Why don't you sell the property with no mortgage and use the money to pay down the other mortgage?

Where are you living?  As in what property do you live in.


----------



## gipimann (24 Apr 2012)

Each property is assessed separately.

The negative equity on one property will not be offset against the other property which is mortgage free.

The formula for calculating means is capital value less outstanding mortgage.

You will have nil means assessed on the property in negative equity, and the unmortgaged property will be assessed in full.


----------



## adamany (24 Apr 2012)

Thank you Gipimann. That's what I thought.
A.


----------



## adamany (24 Apr 2012)

Hi Bronte. Thanks for the reply. I have two properties other than my PPR.  Thanks for the suggestion but selling both won't cover the mortgage on the first! Sign of the times...


----------



## serotoninsid (20 Aug 2012)

gipimann said:


> The formula for calculating means is capital value less outstanding mortgage.


How is 'capital value' arrived at?  Presumably that's the market value of the property at the time of the means test...but how do they go about establishing this? Is this based on a rough calculation by the SWA Officer?

One other query...


If the property is clearly in negative equity, and this leads to a nil means assessment on that property, of what significance is any rent received?  I thought that I read somewhere that the means test is based solely on the capital value of the property - and that rental isn't considered.  Therefore, if the property is let for €1000/month, this is not assessed as means??


----------



## gipimann (20 Aug 2012)

The capital value of a property is determined by a professional valuation, not a rough guide by SW staff.  

If a property has been assessed based on its capital value (whether the result is nil means or not), then any income earned by renting that property is not assessed.   

If a property being rented is also a primary residence (e.g. rent-a-room scheme), then the rental income is assessed and not the value of the property.


----------



## serotoninsid (20 Aug 2012)

gipimann said:


> The capital value of a property is determined by a professional valuation, not a rough guide by SW staff.


Ok, so they get each and every property valued??


----------



## serotoninsid (22 Aug 2012)

Anyone able to clarify this?


----------



## eastbono (22 Aug 2012)

Its up to you to provide current market value.


----------



## gipimann (22 Aug 2012)

Guidelines were issued earlier this year which allowed SW staff carrying out means tests to refer properties for valuation.

I understand that this has been happening but isn't any longer - SW staff are advised to use local knowledge and other information at their disposal to assess capital value.

(Sorry for the delay, I missed your comment, Sid)


----------



## serotoninsid (23 Aug 2012)

Perfect - thanks to you both for posting, much appreciated.  Not a situation I'm in (thankfully) - but potential of being in that position  - so always good to be well prepared.


----------

