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Do Types Of Residential Houses Determine Property Tax? Are There Any Rebates For Seniors?

Property tax is mandatory for every property owner; however, some relaxations are permitted for senior citizens.

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Amit Sethi
January 30, 2024
Property tax

Property tax

Senior citizens usually meet their expenses using the corpus they accumulated before their retirements. Therefore, they can’t afford to spend more than what they have planned for their retirement. Any savings in spending compared to their planned expenses and tax payments can make a huge difference to senior citizens’ finances. Property taxes are subject to state-specific regulations and they vary from one state to another. There are various systems. There are different methods adopted at different places for calculation of the property taxes. According to experts, the following three methods are commonly used to calculate property taxes:

Capital Value System (CVS) – The Capital Value System is used in Mumbai. In this method the Capital Value System (CVS) the annual property tax is computed based on the Market value of the property. In Mumbai, the Ready Reckoner rates are considered as the market value of the property. The Municipal Corporation releases the ready reckoner rates every year.

Unit Area Value System (UAVS) – The Unit Area Value system is the modern method for calculating property tax. It does not depend on the market value or the rental value of the property and, therefore, gives an accurate calculation of the property taxes. This method for calculating the property considers the age of the property, the location of the property, and the type of the property. In the unit area value system, the localities are categorized based on liveability ratings.

Annual Rental Value System (ARVS) – This method calculates the property tax by considering the annual rental value of the property. The municipal authority does the calculation of the rental value of the properties depending on the location, age of the property, and the total area of the property. This method is used in major cities such as Chennai and Hyderabad.

Is There Any Rebate Available On Property Tax For Senior Citizens?

Ravi Shankar Singh, Managing Director, Residential Transaction Services at Colliers India explains, “As property tax is governed by individual state regulations, the rules are different in each state. Some states however offer some rebates/complete exemptions to senior citizens. Also, in Chandigarh on residential lands and buildings of up to 300 square yards, which are self-occupied, no tax is levied on persons, who had served, or are serving in the naval, military or air force, widows and differently-abled people”.

Across states, properties that belong to religious organisations or governments, are not liable to pay any property tax. However, for regular ownerships state governments give rebates if the total property tax due is paid on time and in one go. There is also some rebate offered by some states if this tax is paid online.

Things To Keep In Mind When Paying The Property Taxes

Senior citizens should be aware of the tax assessment methodology in their state/city. The guiding rates keep changing so they should ascertain the tax being calculated as per the latest guidance values.

Experts suggest that one should pay the tax on time else states levy around 1-2% penalty per month for delayed payments. A long delay in payments may also force authorities to attach the property and sell it to recover losses.

 

The author is an independent financial journalist.

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