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Municipal taxes are also called house tax
If it is actually paid ,then only it is allowed as deduction from GAV
Asssuming no Unrealized Rent
| Gross Annual Value | XX |
| Less | |
|
Municipal Taxes (Paid BY OWNER) |
XX |
| Net Asset Value | XX |
Conditions to be fulfilled
1.It should be ACTUALLY PAID (not payable)
Note : – If only due but not paid then deduction not available
The municipal taxes may be paid of any year (may be of previous period or future period ) .
If Property is in foreign country , than municipal taxes of foreign country is also allowed as deduction
2.It should be borne by the owner
Note : – If paid by tenan t or charge from tenant then deduction not available .
QUESTIONS
Q1
| GAV | 500000 |
| Municipal Taxes paid | |
| Current Year Due | 10000 |
| Paid by Tenant | 6000 |
| Paid by Owner | 3000 |
| Bal still Due | 1000 |
| Calculate NAV | |
View
| Gross Annual Value | 500000 |
| Less | |
| Municipal Taxes | 3000 |
| Net Asset Value | 497000 |
Municipal Taxes actually paid by owner allowed as deduction
If not paid or paid by tenant,then not allowed as deduction
Q2
Sove Q1 assuming Municipal taxes paid were of last year
--answer--
Same as of 1 above
Even municipal rent paid of last year allowed as deduction
| Gross Annual Value | 500000 |
| Less | |
| Municipal Taxes | 3000 |
| Net Asset Value | 497000 |
Q3
| GAV | 500000 |
| Municipal Taxes paid by owner but later recovered from tenant | 4000 |
--answer--
Since municipal taxes not borne by the owner, therefore not allowed as deduction
| Gross Annual Value | 500000 |
| Less | |
| Municipal Taxes | 0 |
| Net Asset Value | 500000 |
