Hitesh Uppal, Head of Finance, Magicbricks

Residential and commercial properties are taxed differently based on their intended use. The property taxes for residential properties are usually based on the assessed value of the property, which is determined by the local government. The assessed value is often lower than the market value of the property, which can help to keep property taxes more affordable. On the other hand, property taxes on commercial properties are usually based on a combination of the assessed value of the property and the income generated by the business. This can make property taxes for commercial properties significantly higher than those for residential properties.

To budget for property taxes on a residential property, it's important to understand the property tax rate in the area and the assessed value of the property. For commercial properties, it's important to understand the assessed value of the property and the income generated by the business.  In addition, certain exemptions and deductions are available under Indian tax laws. For example, in the case of a residential property, a homeowner can claim deductions for interest paid on a home loan, and a commercial property owner can claim depreciation on the property. In general, it's a good idea to set aside a portion of the monthly budget specifically for property taxes to avoid any surprises and ensure timely payment of the tax.

Jaatin Suratwala, MD and Chairman, Suratwwala Business Group Ltd

Whether you own a residential or commercial property, budgeting for property taxes is an essential part of managing your finances. Property taxes are a significant expense that can impact your bottom line, and understanding how to budget for them is crucial. However, there are some key differences between residential and commercial properties when it comes to property tax assessments. 

Residential properties are typically valued based on market value, while commercial properties are often assessed based on their income-generating potential. This means that commercial property owners need to take a different approach when it comes to budgeting for property taxes. They need to factor in the potential income they will generate, as well as any expenses related to maintaining the property, in order to accurately assess their tax liability. Residential property owners, on the other hand, may have a more straightforward tax assessment process, but should still consider all factors that may affect their property value. Working with a trusted financial advisor or tax professional can help property owners develop an effective tax budgeting strategy that takes into account all relevant factors, ensuring they are prepared for the costs and avoiding any surprises that may impact their financial stability.

Mukesh Kumar, Founder & Mentor, M-Sanvi Real Estate

Residential and commercial properties are taxed differently, so it's important to understand the differences when budgeting for property taxes. Residential property taxes are typically based on the assessed value of the property and the tax rate set by the local government. The assessed value is usually determined by the local assessor's office, and is based on factors such as the size of the property, the age of the building, and the condition of the property. In general, residential property taxes are lower than commercial property taxes. 

Commercial property taxes are also based on the assessed value of the property, but the tax rate is often higher than for residential properties. Additionally, commercial properties are often subject to additional taxes and fees, such as business taxes, occupancy taxes, and other assessments. When budgeting for property taxes, it's important to factor in the assessed value of the property, the tax rate, and any additional taxes or fees that may apply. It's also a good idea to review your property tax bill each year to ensure that you are being charged the correct amount, and to appeal your assessment if you believe it is too high. Finally, it's important to remember that property taxes can change over time, so it's a good idea to budget for potential increases in the future.

Shashank Mewada, Chief Finance Officer, Homesfy.in & Mymagnet.io

Property tax is an unavoidable expense for property owners in India, yet many people are unaware of what it entails. So many people don't even consider it while planning their budgets. Property tax is not a significant amount if considered monthly. Yet, it is a liability imposed on property owners by municipal corporations, which assess and collect the tax annually or semi-annually. It's calculated based on several factors, including location, property type, occupancy status, carpeted square area. In many locations, it is collected with society maintenance.

While it may seem like an additional burden, paying property tax has several benefits. It funds local civic bodies and enables them to provide better amenities and infrastructure to the community. However, not paying property tax can have severe consequences, including legal action, property seizure, and devaluation of the property's market value.

Do you know that property taxes may increase or decrease over time? In January 2022, the Maha Vikas Aghadi government announced a tax waiver on properties under 500 square feet. The civic body had to forego ₹462 crore. While this move was welcomed by many, it is important to note that such waivers are rare and may not be applicable in all cases.

In conclusion, paying property tax is a civic duty and has long-term benefits for property owners. It is important to stay informed about property tax regulations and budget accordingly to avoid legal or financial consequences.

Prerna Rawat, Property Consultant at Prerna and Company

Property taxes for residential properties are normally dependent on the assessed value of the property. The local government determines the assessed value, which takes into account criteria such as the size and condition of the property, as well as its location. Property taxes in some places may also be determined by the local school district and other municipal services.

To begin budgeting for your residential property taxes, go over your prior year's tax bill and look for any changes in assessed value or tax rate. You can also get an estimate of your impending property tax payment by contacting your local municipality. It's crucial to remember that property taxes might fluctuate from year to year, so it's a good idea to save some money in case your taxes rise suddenly.

Commercial property taxes are likewise based on the assessed value of the property, but there are several important distinctions to be aware of. Commercial properties are frequently subject to a higher tax rate than residential properties, and the assessed valuation may additionally consider the property's earning potential.

Go over your previous year's tax bill and look for any changes in assessed value or tax rate to start preparing for your residential property taxes. Contacting your local municipality will also provide you with an estimate of your upcoming property tax payment. It's important to note that property taxes might vary from year to year, so it's a good idea to save some money in case your taxes suddenly jump.

Angad Bedi, MD, BCD Group

The dynamics of commercial and residential property taxation are guided by the overall guidelines laid out by the Indian government. However, while budgeting for property taxes for both these asset classes, few things are considered. In a residential property, the value of property taxes is generally lower than that of commercial properties, simply because property taxes are calculated basis of the actual value of the property. 

But for residential buyers, the tax implications may vary due to factors such as the gender of the owner, location, and the type of property. While a house property that is taken on a home loan qualifies for tax breaks under Section 24 and Section 80C of the Income-Tax Act, Commercial and Residential properties that are let out, attract tax on income from house property.

Likhita Darshan Vice President - Marketing & Customer Experience

While purchasing a property, every buyer or investor should consider the tax implications associated with it.  Budgeting for property tax is important as property taxes are levied annually and property owners should make a provision for this. Property tax is calculated based on the total value of the property. 

But there are other factors that guide the valuation of taxes, such as location and the type of property, as in, if the property is in under-construction stage or it is a ready-to-move in property. 

While the basic equation is the same, when it comes to budgeting for residential vs commercial property taxes, few factors are taken in consideration. In commercial property taxation for example, unit area value system, capital value-based system and annual rental value system play important roles.

Kaling Porwal, Managing Director, Downtown Lifespaces

Irrespective of the type of property you own, property taxes are inevitable. These taxes are utilised by the government to fund the development and maintenance of public infrastructure. Property taxes are determined by the valuation of the property and the tax rate imposed by the governing body. Since they are inevitable, it's advisable to budget for it in advance.

Ashok Singh Jaunapuria, Managing Director and CEO of SS Group

Residential properties are assessed differently than commercial properties, and the taxes you pay will reflect that. Residential properties are generally assessed at a lower value than commercial properties, which means you'll pay less in property taxes. When budgeting for property taxes, it's important to keep in mind the type of property you own and the tax rate that applies to it. Ensure you know any tax breaks or exemptions that may apply to your property, and take advantage of them if you're eligible.

Ashwin Chawwla, Founder & MD, Escrowpay

An escrow account is a third-party account that is used to hold funds for payment of certain expenses, such as property taxes and insurance premiums. Escrow accounts are commonly used in both residential and commercial real estate transactions, and they can be a helpful tool for budgeting property taxes.

In both residential and commercial real estate, property taxes are typically paid on an annual basis. However, rather than paying the full amount all at once, the property owner can choose to make monthly payments into an escrow account. The escrow account then holds onto these funds until the property tax bill comes due.

In a residential setting, the property owner's mortgage lender is often the party responsible for managing the escrow account. The lender will estimate the property tax bill and divide that amount by 12 to determine the monthly payment that should be made into the escrow account. When the property tax bill comes due, the lender will then withdraw the necessary funds from the escrow account to pay the bill.

In a commercial setting, the property owner may choose to work with a third-party escrow company to manage the account. The process is similar to the residential setting, with the property owner making monthly payments into the account and the escrow company withdrawing the necessary funds to pay the property tax bill.

By using an escrow account to budget for property taxes, property owners can avoid the stress of having to come up with a large lump sum payment once a year. Instead, they can spread out the payments over the course of the year, making it easier to budget and plan for this expense.