Property tax is kind of tax which is paid by the owner of the property to the local government or to the municipal division of the city. The tax amount depends on the value of the land, area and region.
In other countries, it is also called as Mileage Tax.
In India, it is also known as "House Tax". The power is delegated in the hand of local governing bodies and municipality on the quantum of tax payable. It could vary each year depending on the levies by the local authorities.
The property occupied by the owner and which does not generate any rent is also eligible for property tax. In some cities of India the property tax is higher if the property is given out on rent.
Any vacant plots which are not attached to any building is not eligible to be taxed under property tax. Generally, there are 5 types of properties which are eligible for taxation. They are
Residential house, office building, factory building, flats and shops.
How is Property tax calculated?
Property tax is calculated on the basis of ‘Annual Value' which depends on whether the property is self-occupied or let out the property.
While, in case of let out property, the annual value include municipal valuation, rent received and fair rent which is ascertained by Income Tax department.
In case of self-occupied property, the annual value will be Nil if it is solely self-occupied. Annual Value will also be NIL if the property is not self-occupied nor let out.
Property tax comprises taxes like lighting tax, water tax and drainage tax.
5. Individuals can avail deductions up-to 30 per cent. Taxpayers are eligible on the interest on the loan which is availed to build, buy or repair the property.
Individuals who own a property are supposed to pay Property tax.