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It refers to the Rent which the landlord (owner) has not be able to realize
i.e. that Rent which the tenant has failed to pay
It is reduced from GAV along with Municipal Taxes as follows
| Gross Annual Value | XX |
| Less | |
| Municipal Taxes | XX |
| Unrealized Rent | XX |
| Net Asset Value | XX |
Unrealized Rent is allowed as deduction if the following condition are satisfied
- The tenancy is Bonafide
(Rent agreement is genuine)
- The tenant has vacated the property
If the tenant has not vacated , than steps has been taken by land lord to Compel vacation (notice served on tenant )
- The tenant is not in occupation of any other property
- Legal proceedings has been started against the tenant for recovery or the owner has satisfied the A.O that such legal proceedings would be useless .
QUESTION
Q1 Calculate NAV
| Municipal Value | 200000 |
| Fair Rent | 280000 |
| Standard Rent | 240000 |
| Actual Rent Due | 300000 |
| (25000 PM*12) | |
| Actual Rent Paid by tenant | 275000 |
| (25000 PM*11) | |
| Tenant did not pay rent for last month | |
| Municipal taxes paid by owner | 6000 |
| A | Municipal Value | 200000 |
| B | Fair Rent | 280000 |
| C | Higher of Municipal Value or Fair Rent | 280000 |
| D | Standard Rent | 240000 |
| E | Expected Rent (Lower of C or D) | 240000 |
| F | Actual Rent | 300000 |
| G | GAV | 300000 |
| (Higher of Expected or Actual Rent) | ||
| Less | ||
| H | Municipal Taxes Paid | -6000 |
| I | Unearned Rent(25000*1) | -25000 |
| J | NAV | 269000 |
It is assumed that all 4 conditions of Unrealized Rent satisfied
