I know it sounds like a drag; taxes are the last thing on your mind. Even the word tax sounds daunting and evokes some amount of tediousness, but the alternative where you fail to fulfill your property tax obligations, and fall foul, with its attendant consequences is far worse. So yes, let’s talk property taxes, to the classroom we go.
Legal Implications
Should you fail to fulfill your property tax obligations and the taxes unpaid accumulate beyond a certain threshold, then your property will be at the mercy of that state which can repossess and auction off the property in question. In rare cases where the outstanding taxes are so high, other properties belonging to the offender could be auctioned off to defray the outstanding debt.
Different Areas; Different Rates
To give you a fair idea of what rate applies to your specific property, you can check with your local assembly, for instance Accra Metropolitan Assembly (AMA). There are ratings of particular neighborhoods or zones from Class 1 to 3. Your rate is thus tied to your location as well as the property value. It is instructive to note however that commercially rated properties pay higher rates compared to residential properties hence some rates may be higher than others, even within the same zone or classification.
Due to Accra’s complex demographics, the A.M.A has categorized them into zones, charging each zone according to the valuation of the area. For instance, a property located in Airport Residential Area could be pegged at least GHS100 and above while one located in Kisseman could go be pegged at a minimum of GHC30.
Types of Property Taxes
Ground rates: This is paid to the Stool/Skin Lands Commission, in the case of the property belonging to the Skin/Stool for disbursement among the legitimate traditional owners; or to the Lands Commission for disbursement to the rightful owners. This is paid annually on residential and commercial real estate.
Income tax on rent received: Rent is a taxable income and landlords/landladies should declare such income and pay the required income tax on such. The tax should be calculated on the lump sum, if it was a one-time payment, or paid monthly if rent is received on a monthly basis.
Property tax: this is an annual tax charged on every real estate property, including land and is payable to the Internal Revenue Service. It is payable on residential and commercial properties. Property tax, popularly known in Ghana as property rate, paid on immovable property, is collected annually under the auspices of the Ghana Internal Revenue Service (IRS). The Domestic Tax Revenue Service charged with assessing and collection of property related taxes determines how much is to be paid by Ghanaian property owners.
Property tax is levied annually by local authorities on the estimated value of the property, depending on the classification of the area where the property is located. Previous rates ranged from 0.5% to 3%. These rates were by far, the highest rates paid on properties in the capital, Accra in comparison with other regions of Ghana. Our friends at Meqasa put these tax category types together.
State Protection
So, as we say in these parts “shine your eyes”, grab a seat, spend some time over books because in as much as fulfilling your tax obligations sometimes seem like an unnecessary burden and “money gone down the drain”, there are certain benefits and protection that the state provides to you when your taxes check out. By fulfilling your tax obligations, you are captured in state records and recognized as the legitimate property owner with your address attached. With state recognition, you are protected in case of unforeseen claims and disputes. So you see, taxes are not a one way affair that benefit only the state, you stand to gain as well. Pick up that phone and call your Assembly and work those numbers.
The writer is the Executive director of Yecham Property Consult
& Founder of Ghana Green Building Summit.
Email: [email protected]
LinkedIn: Cyril Nii Ayitey Tetteh
YouTube: Real Estate Minute
