Released on: January 27, 2008, 2:23 am

Press Release Author: barbara camie

Industry: Financial

Press Release Summary: Property tax also means house tax that is levied on house
owners by the local self government of a town or city, the municipality.

Press Release Body: This is one of the main revenue streams for any municipality to
manage the city. The property tax is collected on a yearly basis by the
municipality. The fund collected in the process is sufficient to run the civic
services of the city such as repair and maintenance of the road, execution of new
infrastructure works such as flyovers and grade separators to decongest the busy
roads of the city, safe and efficient garbage disposal and solid waste management,
providing basic amenities to the localities such as parks and playgrounds, managing
the storm water drainage system and treatment of the waste water. There are other
basic functions such as maintaining cleanliness and health of the city that are
taken care of through collection of property tax.

The basis for determining the property tax is the capital value of the building or
the property. The capital value is fixed as per the property guidance value proposed
by the government. The property guidance value proposed by the government differs in
each locality. The property guidance value is revised once every four years by the
government depending the development activity taking place in the city or town. The
property guidance value is more of locality specific nature. The property guidance
value in the central business districts of the city is always higher when compared
to the residential localities. This is so because the value of the land in the
central business districts is high because of the huge demand it has.

Besides, the property tax is different for a residential building and a commercial
building. While the property tax for a residential building is nominal across the
locality, the property tax of a commercial building varies depending on the changes
executed on the building. It could be fresh additions or alterations of the building
leading to higher rent realization. As the rent sores due to demand for office
space, so does the property tax. Though the property guidance value provided by the
government acts as the base, several other factors could increase the property tax
rate. It could be the use of water, employment of the sewerage connection and
subscribing to garbage disposal service.

On the contrary, the house tax or the property tax levied on individual houses is
less. If the house constructed in a particular area has been earmarked for
demolition and redevelopment, its property tax could go up substantially since it
would be considered a new building. However, in case of old houses in areas, which
have high property guidance value, the municipality offers depreciation. It means
the house owner will be paying the property tax in accordance with his capacity to
pay.


However, the municipality will collect large amounts of property tax from real
estate developers, shopping malls, multiplexes and many other prime properties. They
are made to pay a higher property tax since their income from the projects is higher
when compared to an individual house owner.

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