Real estate tax/property tax

[Jonjo]

Does anyone know anything of the real estate tax/property tax situation in hurghada.
Real estate tax came into force in june 2008 and owners had to regester by january 2009.
Some owners who have been regestered by their agents/developers are being sent estate tax bills/assesments rainging from 2900le -3250le for 2008 to 2009.
Does anyone hav any insight in to the tax law regardin real estate tax, i know the ew property tax in comming into force and you have to regester at the tax office by 30th march 2010.

[Scott]

One thing clear - property value under 500 000 le - NOT taxable.

Not so clear - rumored delays in the implementation of the law.

I talk to my lawyer he (he is also a Honorary Consul for a European country) and he admits he is lost...

So, I really don't know what to say. I have given my lawyer my application and he said he would do the right thing if and when the law gets settled!

I love Egypt!

Best to all,
Me

[Jonjo]

Am confused as bills from tax office are being sent for the period 2008 to 2009, as the complex agents have given tax office all owners contracts
for regestration. with the new property tax you have to regester by 31st march , another problem is the tax assesment/bill is in egyptian and so people do not know how things have been worked out. confusion reigns.

[Wellheld]

New Property Tax Information



1. Property (ies) subject to tax

· New built properties residential or commercial

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

· Each unit in a building is subject to tax 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 of the succeeding year and second installment is payable on or before end of December of the succeeding year. The tax can also be paid at 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



Additional Information:



The Appreciation and Enumeration Council are the authority responsible in evaluating and assessing the property. Each property will be assessed every 5 years. After 5 years is completed, re-assessment on the property will be done. Property will be appraised not exceeding 30% of the first assessment for residential property and 45% of the first assessment for non residential property.

[Wellheld]

So it's all clear now?
Any more questions?