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What is difference between annual value and annual rental value?

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0 2022-12-29T13:17:16+00:00
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Hey,

You should know the difference between annual value and annual rental value. It will help you calculate income from the property for income tax purposes. You can know property value to know how much home loan you can avail. Get to know other details right here.

Get legal assistance from the NoBroker legal service team to know more about your property’s annual value.

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 How to distinguish between annual value and annual rental value? Annual Value : 

It is the sum of rent which is reasonably expected to be let from year to year. In simple words, it is the sum of notional rent had the property been rented. Factors such as actual rent received, municipal value, fair rent, and standard rent determine the annual value of a property:

Here is how to calculate the annual value : 

A = Fair Rent,

B = Standard Rent, 

C = Municipal Value

D = Actual Rent Received

Notional Rental Income from House Property E = Higher of A or C i.e. Higher of Fair Rent Value or Municipal Value.

F = Expected Rent = Lower of E or B

So, Gross Annual Value of Property = Higher of Expected Rent or Actual Rent Received = Higher of F or D

Annual Rental Value (ARV): 

It is the amount for which your property (residential/commercial) will typically rent. It is not the actual rent, rather it is the representative of prevailing rent in the real estate market. It is equal to the net rent per square foot plus the costs of comfortable occupancy, multiplied by the square foot area of the premises occupied. In simple words, it is the estimated rent. 

Net Annual Value is Gross Annual Value minus municipal taxes like property tax, sewerage tax and so on.

This is all from my end on the difference between annual value and annual rental value

Read more: 

How to calculate the gross annual value of house property?

Can you get a free valuation of your house property?

How to calculate the valuation of your property?

How to calculate net annual value of house property?

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