Assessment of gav from income house property

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

29 August 2015 My father owns an undivided house property. We are living in ground floor and in front we have 3 commercial shops. The other owner of owns first floor , second and third. How to assess GAV . The total area is 1100 sq.ft

Querist : Anonymous

Querist : Anonymous (Querist)

29 August 2015 Pls reply soon

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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14 July 2024 To assess the Gross Annual Value (GAV) of the house property owned by your father, which includes both residential and commercial portions, you need to follow these steps:

### Step-by-Step Assessment of GAV:

1. **Determine Total Rental Income:**
- Calculate the total rental income from both the residential portion (ground floor where you live) and the commercial shops (front portion).

2. **Residential Portion:**
- The rental income from the residential portion (ground floor) can be estimated based on prevailing rental rates for similar residential properties in the locality. You can also consider the rental rates of similar properties in the area to get an estimate.

3. **Commercial Portion (Shops):**
- For the commercial shops, determine the fair rental value (FRV) of each shop. FRV can be based on the actual rent received, if any, or market rates for similar commercial properties in the locality. The FRV should be estimated separately for each shop.

4. **Proportionate Allocation:**
- Allocate the total rental income between the residential and commercial portions based on the area occupied by each. Since you mentioned the property's total area is 1100 sq.ft, allocate the rental income proportionately:
- Calculate the area occupied by the residential portion (ground floor where you live) and the area occupied by the commercial shops.
- Use this allocation to split the total rental income accordingly.

5. **Calculate GAV:**
- The Gross Annual Value (GAV) is the higher of the standard rent (which is determined by municipal authorities based on the area and location) or the actual rent received or receivable for the property.

6. **Standard Rent:**
- Standard rent is the rent that the property can reasonably be expected to fetch if let out on the date of assessment under standard conditions. Municipal authorities may have guidelines or rates for standard rent based on the type and location of the property.

7. **Determine GAV for Residential and Commercial Portions:**
- Once you have the rental income allocated between residential and commercial portions, apply the appropriate method to determine the GAV for each portion:
- For the residential portion, use the higher of standard rent or actual rent received.
- For the commercial shops, use the higher of standard rent or actual rent received for each shop.

### Considerations:

- **Municipal Rateable Value:** Some municipalities assess property tax based on rateable value, which may also be considered for determining GAV.

- **Expert Advice:** If you're unsure about rental rates or the correct method to assess GAV, consulting with a local property consultant or a tax advisor specializing in property taxation would be beneficial. They can provide guidance based on local regulations and practices.

By following these steps and considering the specific details of the property, you can accurately assess the Gross Annual Value (GAV) for the undivided house property owned by your father, which includes both residential and commercial portions.

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