Property Tax; Know How It Is Calculated

Property tax

It is that type of tax that is imposed on real estate by the municipal authorities in order to maintain the infrastructure facilities.

Where is the tax imposed?

This tax is imposed on all real estate, including buildings (residential/ commercial), attached land, and improvements made to the land, but not on vacant plots of land.

Ways of calculating the tax

1. Capital Value System (CVS): By using this way, the local government calculates property tax as a percentage of the property’s market value based on its location.

2. Annual Rental Value System (ARV) Or Rateable Value System (RVS)

In this way, the tax is calculated based on the property's yearly rental value. There is no rule as to whether the property must be rented out, rather the tax is assessed based on how much rent the property would generate in case it was rented out. 

3. Unit Area Value System (UAS)

The tax is imposed as per unit price of the built-up area of the property. The price here is fixed based on the expected returns of the property, considering location, land price, and usage into mind.

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