Definitions Of The Terms Used In Valuation.

1. Gross Income:

 It is the total income and includes all receipts from various sources. The outgoings and the operational charges are not deducted.

2.Net Income Or Net Return:

It is the savings or the amount left after deducting all outgoings, operational and collection expenses from the gross income or the total receipt.

Net Income = Gross Income - Outgoings.    

3. Outgoings: 

   Outgoings ate the expenses that are required to be incurred in order to maintain the revenue of the building.       

4. Taxes :

These include taxes paid by the owner of the property annually. Municipal tax, property tax, wealth tax. These taxes are fixed on the basis of the "Annual Rental Value" of the property after deductions for annual repairs etc.   

5. Repairs:

Repairs need to be carried out every year in order to maintain a property in good condition. The amount spent depends on the age, materials, nature of the construction and use of the building etc.

For annual repairs; 1-1.5% of the total cost of construction may also be taken.

5. Management And Collection Charges :

These include the expenses on rent collector, watchman, liftman, pump attendant and sweeper etc.

About  5-10 % of the gross rent may be taken for this.

6. Annual Sinking :

A certain amount of the gross rent is set aside annually as a sinking fund to accumulate the cost of construction when the life of the building is over. It accumulates a sufficient amount to meet the cost of construction or maintenance or replacement of a structure after its utility period.

7. Loss Of Rents :

The property may not be kept fully occupied all through the year. A suitable amount is deducted from the gross rent under outgoings.

8. Miscellaneous :

This includes electric charges for running lifts, pumps, lighting common spaces, and, other similar charges that are born by the owner of the building.