Here is how to calculate rateable value of property. The Rateable Value (RV) of a property is an estimation used by municipal corporations to assess property tax. It is primarily based on the annual rental value a property can generate, regardless of whether it is rented or self-occupied.
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How Do I Find the Rateable Value of My Property?
The general formula used by municipalities is:
Rateable Value = Gross Annual Rental Value – Allowable Deductions
Where:
Gross Annual Rental Value is the estimated rental income the property could earn annually.
Allowable Deductions include maintenance costs, municipal charges, depreciation, and other applicable exemptions.
Different municipalities use varying methods to calculate property tax and rateable value:
Annual Rental Value System: Used in cities like Chennai and Hyderabad, this system estimates the potential rent a property can fetch, considering factors such as location, size, and amenities.
Capital Value System: Used in Mumbai, this method determines property tax based on a fixed percentage of the property’s market value.
Unit Area Value System: Used in cities like Bengaluru and Delhi, this method assigns a fixed per-unit price based on the property’s location, usage, and expected returns.
If a property’s estimated annual rental value is Rs. 1,20,000 and allowable deductions total Rs. 20,000, then: Rateable Value = Rs. 1,20,000 - Rs. 20,000 = Rs. 1,00,000
The municipal corporation applies a tax rate to this value to determine the final property tax payable.
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The rateable value of a property is an assessment of its rental value determined by local authorities for the purpose of calculating rates or taxes. It serves as the basis for determining the amount a property owner must pay in rates or taxes to the local government. So let me tell you how to calculate rateable value of property in detail here.
How is Rateable Value Calculated?
In India, the rateable value of a property can be calculated using the formula:
Annual rental value = Monthly rental value x 12 – 10%.
For example, let's say a property in Mumbai has a monthly rental value of Rs 20,000.
By applying the formula, we get Rs 20,000 (monthly rent) x 12 = Rs 240,000 (annual rental value). Subtracting 10% of Rs 240,000 (which is Rs 24,000) yields Rs 216,000.
Therefore, the rateable value of the property in this scenario would be Rs 216,000. This calculation provides a method for estimating the property's value for taxation or assessment purposes, taking into account its rental income and applying a standard deduction. So this is how to calculate rateable value.
You can consult with a professional to get a better idea of it.
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How to Calculate Rateable Value of Property?
Varsha
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2024-05-06T08:44:46+00:00 2025-02-12T22:25:51+00:00Comment
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