Property tax, also known as house tax is the mandatory charge levied on a land or property owner by a municipal corporation or government-mandated body. It is calculated by the governing authorities in proportion to the total value of the property concerned.
An individual owning a taxable property is bound to pay the stipulated property tax before the specified due date. The tax is usually levied on real estate properties, which include-
- Commercial or residential buildings.
- Rented flats or houses.
- Attached lands.
Vacant lands with no adjoining buildings are not taxable under this tax regime. The tax rates and method of calculating the tax are determined by the governing bodies.
Different Methods Of Calculating Property Tax
There are broadly 3 ways of assessing tax on property. They are-
- Capital Value System (CVS) – Tax on property under this method is levied as a percentage of the market value of a property. A property’s market value is generally determined by the government based on certain factors like location, amenities, and so on. The tax rate is revised and published on an annual basis. Capital Value System of taxation is followed by several municipalities in Mumbai.
- Unit Value Area System (UAS) – Tax under this system is levied on the per-unit price of the built-up area of the property. This price is set based on the expected returns of the property. Municipalities in Delhi, Kolkata, Hyderabad, Patna, Bengaluru, among others follow this system of calculating property tax.
- Rateable Value System (RVS) – This taxation method is also referred to as the Annual Rental System. Based on the size, location, availability of amenities, condition, etc. the municipal authority sets the annual rent on a property. The property tax is calculated on this rental value. The actual rent being collected on this property need not be the same as the rent determined by the municipal authorities. This taxation method is followed by the municipalities in Chennai and Hyderabad.
Individuals can pay property tax online or offline by visiting the local office of the concerned municipality. The property owner has to pay this tax annually. Delay in paying property tax can also attract a penalty in the form of interest on the due amount.
Tax liabilities can often come up as a financial burden for a property owner. Meeting tax liabilities along with other anonymous expenses of purchasing a property could pile up to form a lump sum amount. Advances from financial institutions such a loan against property can help an individual cope up with such expenses. A borrower needs to avail this loan against a property or land which is kept as mortgage.
HFCs offers loan of up to Rs.1 crore which can be used without any end-user restriction. Borrowers can even assess his tax liabilities to determine the ideal tenor of a loan against property. A flexible repayment tenor permitted by the lender makes these loans a convenient alternative.
The HFC now brings exclusive pre-approved offer on loans against property, and on other advances. These features assist customers while availing loans. The entire process starting from application to disbursal of a loan is made easy with these offers. Borrowers can have a look at the pre-approved offers online by providing just their name and mobile number.
Financially responsible citizens usually organise their funds beforehand to make sure they can pay property tax and miscellaneous charges on a loan against property. Timely tax payments also help individuals maintain proper records of income and expenses.
Although a borrower can suffice his tax liabilities through property loans, it is important to plan the expenses accordingly. This is because one also has to repay the advance within the provided time. Before applying for the loan, he/she must research thoroughly on which lender is offering maximum benefits and charging minimum interest rates. Various financial institutions have official pages, from where you can learn all about their loan policies and charges.
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