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It refers to the Rent which the landlord (owner) has not be able to realize

i.e. that Rent which the tenant has failed to pay


It is reduced from GAV along with Municipal Taxes as follows

Gross Annual ValueXX
Municipal TaxesXX
Unrealized RentXX
Net Asset ValueXX


Unrealized Rent is allowed as deduction if the following condition are satisfied

  1. The tenancy is Bonafide

        (Rent agreement is  genuine)

  1. The tenant has vacated the property

        If the tenant has not vacated , than steps has been taken by land lord to Compel vacation (notice served on tenant )

  1. The tenant is not in occupation of any other property
  2. Legal proceedings has been startedagainst the tenant for recovery or the owner has satisfied the A.O  that such legal proceedings would  be useless .



Q1 Calculate NAV 

Municipal Value200000
Fair Rent280000
Standard Rent240000
Actual Rent Due300000
(25000 PM*12) 
Actual Rent Paid by tenant275000
(25000 PM*11) 
Tenant did not pay rent for last month
Municipal taxes paid by owner6000


AMunicipal Value200000
BFair Rent280000
CHigher of Municipal Value or Fair Rent280000
DStandard Rent240000
EExpected Rent (Lower of C or D)240000
FActual Rent300000
 (Higher of Expected or Actual Rent) 
HMunicipal Taxes Paid-6000
IUnearned Rent(25000*1)-25000

It is assumed that all 4 conditions of Unrealized Rent satisfied



  1. Income Tax
  2. Income From House Property
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CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 6 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com.