Satya M Jayate (Executive ) 09 August 2012

Valuation

Sir,

We jointly have a residential property in mumbai.

For tax purpose I want to evaluate it's past value on year to year basis.

My understanding is that :

On the basis of Maharastra Government yearly reckoner rate Rs./sq mt for the location, the value can be worked out for a particular year.

My question is..

Is it the right way to arrive the value of a flat?

What about the floor height, is it to be added or not? If yes , than how to work out?

How to work out and deduct the depreciation on yearly basis to arrive the correct value of the flat? Not the market value.

What will be the share of liability in joint property taxation.? We do not envisage any dispute in share, but how to arrive, mutually to document on retrospective date? Registration deed of the flat is silent on share of it in between the joint owners.

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3 Replies

R RAJAGOPALAN (ADVOCATE) 15 August 2012

For iincome tax/ wealth tax purposes, generally it is the fair mrket value that is relevant. Fair market value is the price it would fetch if sold in the open market. It has to be estimated having regard to the market conditions, location, age of the building and a host of other factors. The Maharastra Government yearly reckoner rate may be relevant, but not binding.

The intended purpose of the proposed valuation is not stated.

Satya M Jayate (Executive ) 15 August 2012

Sir, Rajgopalan Ji, the purpose is to put the value in our book of account after due depreciation. We do not want to work out market value, nor the evaluation is for corporate property tax.

Pl guide about the formula.

R RAJAGOPALAN (ADVOCATE) 16 August 2012

If it is a purely residential house, not let out, but used for the personal use of the owner, it is doubtful whether any dpreciation will be admissible for income tax purposes.

If the proposed valuation is purely for accounting purposes without any tax implication, you may get the property valued by a Valuer registered with the I.T Department ('Approved Valuer').