The fair rent of a house property is Rs. 4,00,000, Municipal valuation is Rs.3,00,000 and Standard Rent is Rs.3,60,000. Actual Rent is Rs.27,500 p.m. and the house was vacant for 3 months. My query is since RLV is higher than Actual Rent not due to vacancy, What will be the amount to be considered for vacancy allowance for calculation of GAV?
ps : I referred Girish Ahuja and Singhania books for reference but the answer seems to differing.
Hi
GAV = 3,30,000
Vacancy allowance will be= Nil. As there is no loss due to vacancy as expected rent exceeds actual rent.
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Actual Rent for 12months wud have been Rs. 330,000
Hence, Actual rent is lower not becoz of vacancy its becoz of other factors also.
A.R < F.R becoz of any other factors also So RLV should be taken as annual Value(GAV) So GAV should be Rs. 360,000
Agreed
GAV will be 360000
I had solved as per steps given in Vinod Singhania Book....
Step 1: Reasonable Expected Rent
a.Higher of Fair Rent vs Municipal Valuation ----- Higher of 4,00,000 Vs 3,00,000
b.Lower of answer in a Vs Standard Rent ----- 4,00,000 Vs 3,60,000
So Reasonable Expected Rent is 3,60,000
Step 2: Actual Rent of the Property after deducting Unrealised rent before considering Loss due to vaccancy
a. Rent of the property for the Previous Yr it was actually available for let out (assumed it was available for let throught the PY) - 27500*12---------- 3,30,000
b. Less : Unrealised Rent --------------- 0
c. Rent of the property (Annual Rent) ---------- 3,30,000
Step 3: Higher of Step 1 answer vs Step 2 answer
Higher of 3,60,000 Vs 3,30,000
Step 4: Loss due to Vaccancy 27500*3 -------- 82,500
Step 5: Gross Annual Value = Step 3 answer minus Step 4
GAV = 3,60,000 - 82,500 --------> 2,77,500
In the given problem calculation of GAV for two step.
1. if vacency period Are Given given.
than, GAV= Fair Value&MV which is higher
But <= Standard Value
so GAV=Rs.360000 and,
2. ARRR Ex. U Rent or Vacency =(Rs.27500*9=Rs.247500) and,if including vacency period rent(ie.Rs.330000) which not exceed GAV(step-I)
so, GAV=Rs.360000.
Note:- If ARRR Including Vacency Exceed GAV in step-1 than,
GAV=ARRR.
In the given problem calculation of GAV for two step.
1. if vacency period Are Given given.
than, GAV= Fair Value&MV which is higher
But <= Standard Value
so GAV=Rs.360000 and,
2. ARRR Ex. U Rent or Vacency =(Rs.27500*9=Rs.247500) and,if including vacency period rent(ie.Rs.330000) which not exceed GAV(step-I)
so, GAV=Rs.360000.
Note:- If ARRR Including Vacency Exceed GAV in step-1 than,
GAV=ARRR.
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