Property tax and who pays what after possession
Loans & money · 5 min read · Reviewed February 2026
Property tax is a municipal levy on the owner, assessed by the local body using its own method — annual rental value, capital value or unit area — so rates and formulas differ city to city. After a purchase, apply for mutation so the bill issues in your name; until then the record, and the demand, may still sit with the seller.
How the assessment is built
Municipal corporations use different bases. Some assess a notional annual rental value, some a capital value linked to circle rates, and some a unit area value multiplied by built-up area, location and usage factors.
Usage matters: self-occupied, rented and commercial use are often taxed differently, and misdeclaring usage creates arrears with penalties later.
Buyer, seller and mutation
Tax for the period before completion belongs to the seller. Take the latest paid receipt at handover and apportion the current period in the agreement, then file for mutation with the corporation so future bills come to you.
Mutation is separate from registration. Registration transfers title; mutation updates the municipal or revenue record used for billing.
- Collect the last paid property tax receipt at closing.
- Apply for mutation with the registered deed and identity documents.
- Check for rebates — many corporations discount early or online payment.
Tenants and property tax
Property tax is the owner's statutory liability. A lease can require the tenant to reimburse it, but that is a contractual arrangement between the parties and does not shift the liability to the municipality.
Frequently asked questions
- What happens if property tax is unpaid?
- Arrears accumulate with interest and penalty, and corporations can attach or restrict services. Unpaid tax also blocks clean transfers, since buyers ask for the paid receipt.
- Is mutation compulsory?
- It is how the municipal record reflects your ownership for billing. Skipping it means bills, notices and rebates keep going to the previous owner.
- Does a tenant pay property tax?
- Not by law. The owner is liable; a lease can require the tenant to reimburse it as part of the rent arrangement.