Valuation of immovable property is very important for the purpose of computation of wealth tax. Wealth tax is leviable on any immovable property, being a building or land appurtenant. According to rules,the value of any immovable property will be the amount arrived at by multiplying the net maintainable rent by the figure 12.5.

In case of property that is constructed on leasehold land,the multiplier would be:


Where the unexpired period of the lease of such land is 50 years or more, the multiplier would be 10
Where the unexpired period of the lease of such land is ‘less than 50 years, the multiplier would be eight In case such property is acquired or construction completed after March 31,1974, and if the value so arrived at is lower than the cost of acquisition or construction plus the cost of any improvement to the property , the cost of acquisition or construction will be taken to be the value of the property .

These rules are not applicable for determining the value of one house belonging to the assessee, where such house is acquired or constructed and the house is exclusively used by the assessee for his own residential purposes throughout the period of twelve months prior to the valuation date; and the cost of acquisition/construction plus any improvement to the house, does not exceed, Rs 50 lakhs (if the house is situated at Mumbai, Kolkata, Delhi or Chennai) and Rs 25 lakhs (for other places).

In case the person has more than one house which is exclusively used by him for residential purposes, then the above provisions will apply to only in respect of one of such houses which the assessee may specify at his discretion.

The rent received or receivable will include all payments for the use of the property,the value of all benefits or perquisites whether convertible into money or not, obtained from a tenant or occupier of the property and any sum paid by a tenant or occupier of the property in respect of any obligation which would have been payable by the owner.

Net maintainable rent

For the purposes of wealth tax, net maintainable rent in relation to an immovable property, will be the amount of gross maintainable rent as reduced by: the amount of taxes levied by any local authority in respect of the property; and 15 percent of the gross maintainable rent.

Gross maintainable rent means:


Where the property is let out, higher of the amount received or receivable by the owner as annual rent or the annual value assessed by the local authority in whose area the property is situated for levy of property tax.

Where the property is let for only a part of the previous year, the proportionate amount of actual rent received or receivable by the owner In these cases, such actual rent will be increased in the manner specified below :

Where the property is in the occupation of a tenant and taxes levied by any local authority in respect of the property are borne wholly or partly by the tenant, by the amount of the taxes so borne by the tenant

Where the property is in the occupation of a tenant and expenditure on repairs in respect of the property is borne by the tenant, then by oneninth of the actual rent

Where the owner has accepted any amount as deposit (not being advance payment for three months), by the amount calculated at the rate of 15 percent per annum on thedeposit outstanding for the number of months during which such deposit was held by the owner.