Property Tax

New Property Tax Information

1. Property (ies) subject to tax

·         New built properties residential and Non Residential

·         All kinds of properties that were built and not registered in the Tax Office

·         Each unit in a building whether the unit is completed and occupied; completed and not occupied OR even it is not completed but is occupied.

2. Exemption

·         Residential property whose annual rent is 6000 Egyptian pounds and below (Although exempted from paying tax, the concerned citizen must register their property not later than December 31, 2009).

·         Property whose market value after assessment is 500 000 Egyptian pounds and below (Although exempted from paying tax, the concerned citizen must register their property not later than December 31, 2009).

·         Others

1. Buildings owned by labor associations & organizations that are registered and specialized for their managing offices.
2. Educational institutions, hospitals, infirmaries, orphanages and charity associations.
3. Quarters for political parties and professional organizations.
4. Enclosed graves and buildings of graveyards .
5. Buildings for youths & sport centers.
6. Buildings owned by foreign governmental authorities (such as foreign embassies), provided that the treatment shall be the same.
7. Building that is used in connection with agriculture
8. Building that is used for social occasions without allowing a profit.

3. Allowable Deduction ( used to maintain the property)

·         Residential                                    30%

·         Other than residential               32%

4. The tax is payable next year after evaluation and assessment of the property. The Real Estate Tax Office will notify the concerned citizen in writing or by notice to be published in designated office in the Local Government.

5. The tax is payable in two installments. First installment is on or before end of June following the registration year and second installment is payable on or before end of December following the registration year . The tax can also be paid in one time.

6. Penalty/Surcharge

·         Non compliance to new tax law. That is a failure to register their property before December 31, 2009 resulting in penalty ranging from 200 Egyptian up to 2000 Egyptian pounds will be imposed.

·         Failure to pay the tax. A surcharge from 1000 up to 5000 egyptian pounds with 2% interest on every day of delay based on unpaid taxes.

7. Requirement for a foreigner owning property in Egypt

·         Valid contract with copy of passport

·         Power of Attorney to designate another party to represent the owner.

8. How will the tax be calculated? 

A.      The property will be assessed by the council authorized by the Government. Sixty percent (60%) of the assessment based on market value will serve as the bases in calculating the annual rent value.

B.       An allowable deduction of 30% is given for residential property and 32% for non residential.

C.       Annual rent is determined by getting 3% of the difference between A & B

D.      After annual rent is determined in (C), deduct 6000 Egyptian pounds as exemption for residential property (given in #2).

E.       Tax due will be 10% of net of annual rent and exemption (for residential property)

Properties valued at 500,000 Egyptian pounds and up will be subjected to tax therefore property which is less than 500,000 Egyptian pounds is exempted from paying the tax.

Example: A property is appraised at 600 000 Egyptian pounds, How much is tax due for Residential?

 For Non Residential? Calculation:

                                                                                                                        Residential            Non Residential

A.      Assessment of the property                                                             600 000 x 60%     600 000 x 60%    

Base value                                                                                             360 000                 360 000

B.       Less: 30% Allowable deduction for residential property           

        (used for maintaining the property)                                               108 000                 115 200

Basis in determining annual rent                                                     252 000                  244 800

C.       Determine the annual rent  by getting 3% in (B)                             7 560                     7 344

D.      Deduct the exemption (for residential )                                        (   6 000 )               __                          

Net tax base                                                                                             1 560                      7 344

Multiply by 10%                                                                                   x     10%                 x     10%

Tax due                                                                                                        156                     734.4

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Additional Information:

The Appreciation and Enumeration Council is the Department authorized by Egypt Government to evaluate and assess the property.

The property will be assessed every 5 years. After 5 years is completed, there will be re-assessment on the property with an increment not exceeding  30% of the first assessment on residential property and 45% of the first assessment on non residential property.

With kind regards

Yes , the reason is the ownership not the rental.

Please note that : the calculation of the due tax doesn't depend on the price of the unit according to the purchase contract. Taxation authority shall make evaluation , that evaluation will take in the consideration the following :

1-    Development location.

2-    Unit location.

3-    Level of the property finishing.

4-    Market value of the property.

5-    Capital value of the property.

Baroudy Law Firm

Cairo - Hurghada - Luxor

www.baroudylaw.com

info@baroudylaw.com