Income from House Property for CFP – 2

Components of GAV:

Municipal Valuation:

• For collecting municipal taxes, local authorities make a periodical survey of all the building in their jurisdiction.
• Such valuation may be taken as a strong evidence representing the earning capacity of building
• In metro cities municipal authorities determine net rentable value after deducting 10% of gross rentable value on account of repairs and an allowance of service taxes
• Therefore the net municipal valuation requires an adjustment for determining reasonable rent for income tax purpose

Fair Rent:

• Fair rent of the property can be determined on the basis of a rent fetched by the similar property in the same or similar locality
• Fair rent helps in arriving at reasonable expected return

Standard Rent:

• Standard rent is the maximum rent which a person can legally recover from his tenant under a Rent Control Act.

 

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