How is property tax calculated after resale?

Property tax is a recurring levy imposed by local municipal bodies on real estate properties. After resale or ownership transfer, the tax liability shifts to the new owner, and the calculation of property tax is typically based on area, usage, location, type of construction, and valuation method as prescribed by the respective municipal corporation or panchayat.

1. Property Tax Liability Transfer

• Upon the resale of a property, the buyer becomes responsible for paying property tax from the date of registration.
  
• The buyer must initiate mutation of records with the local municipal body to update ownership details.
  
• The tax is levied annually, semi-annually, or quarterly, depending on local regulations.
  

2. Valuation Methods for Property Tax

Different municipal bodies follow one of the following methods to determine the Annual Value (AV), which becomes the basis for tax computation:

a. Annual Rental Value (ARV) Method

• Tax is based on the estimated rental income the property can generate annually.
  
• Common in older urban areas.
  

b. Capital Value System (CVS)

• Tax is calculated as a percentage of the market value of the property, as assessed by the municipal authority.
  
• Example: In Mumbai, property tax is based on Ready Reckoner (RR) rates.
  

c. Unit Area Value (UAV) Method

• Tax is based on a predefined per-square-foot rate assigned to a locality, multiplied by the property’s built-up area.
  
• Common in cities like Delhi, Bengaluru, and Hyderabad.
  

3. Factors That Influence Property Tax Post-Resale

• Property Usage: Residential, commercial, or industrial use affects tax rates.
  
• Carpet/Built-Up Area: Larger properties incur higher taxes.
  
• Location/Zone: Properties in premium zones have higher multipliers or base rates.
  
• Age of Building: Older structures may attract rebates or lower rates.
  
• Amenities: Properties with lifts, parking, gardens, or swimming pools may have surcharges.
  

4. Ownership Change and Tax Recalculation

• After resale, the new owner must apply for mutation of property records, submitting:
  
  • Sale deed
    
  • Previous tax receipts
    
  • Identity and address proof
    
  • NOC from previous owner (in some cases)
    
• Post mutation, the municipal authority recalculates the tax and generates a new Property Tax Identification Number (PTIN) or updates the existing one with the new owner’s name.
  

5. Applicable Deductions and Rebates

• Early payment rebates may be offered (e.g., 5%–10% discount for paying before a due date).
  
• Concessions may apply to:
  
  • Senior citizens
    
  • Women property owners
    
  • Properties used for self-occupation
    

6. Tax Calculation Example (Unit Area Method)

Let’s say:

• Unit area rate for the zone: ₹10/sq. ft/month
  
• Built-up area: 1,000 sq. ft.
  
• Usage: Residential
  
• Annual value = ₹10 × 1,000 × 12 = ₹1,20,000
  
• Property tax rate = 10%
  

Annual tax payable = ₹12,000

7. Online Payment and Assessment Tools

• Most municipal corporations provide:
  
  • Online portals for tax estimation and payment
    
  • Calculators to input area, location, usage, and age of building
    
• Examples:
  
  • BBMP (Bangalore)
    
  • GHMC (Hyderabad)
    
  • BMC (Mumbai)
    
  • SDMC/NDMC (Delhi)