My PPOR is zoned rural and I was wondering if this affects my ability to access the equity? I owe $290,000 and it has been bank valued (a year ago so I'm hopeful it is actually worth more) at $550,000. I was talking to someone who mentioned that I wouldn't be able to access this equity in the same way I would a house in town because of something to do with the zoning.
Does anyone have any experience with this? Would it make a difference if we were using the land to make money?
Zoning can affect the LVR banks will lend on.
Banks generally see rural property as greater risk and therefore will lend at a lower LVR. Not all banks are the same and not all rural areas (postcodes) are the same.
Land area can also play a part.
This is where a broker comes into their own – they can, without doing any formal work, tell you what result you are likely to obtain before you do any formal work.
Yes this will def affect the LVR. But exactly how will depend on what sort of property it is and where it is.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
So would it be better if we did make some money from the land? We could start selling stuff (we have a house deposit eating the grass down in the paddock
) and I know it affects it but don't know if it is good effects or bad…Hi ML,
The zoning is generally the sole determinant of how much a bank will lend. Activities on it will have negligible, if any, benefit to a borrower.
If you do start making money on the land it is possible that you will be able to negatively gear the land. Having said that the ATO does like to see some legitimate business activity taking – agisting 2 cows on 1000 hectares probably wouldn't be considered normal by the ATO.
Yes, it wont help with the finance, but if you were running a sheep farm it might be treated differently to a non-income producing house on land.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
) and I know it affects it but don't know if it is good effects or bad…You must be logged in to reply to this topic. If you don't have an account, you can register here.
