Accra, December 8 2014: Every country seeks to develop and Ghana is no different. With development comes resource management and this is used to fund activities that enhance the profile of a country. A number of methods are employed to pool resources and one such method is taxation.
Taxes can be generated from a wide variety of sources such as from personal income, company profits and even gifts. The real estate industry in Ghana is just one of many sectors taxed to ensure that the nation reaps financial rewards. Online property portal Lamudi has compiled a list of taxes to expect in the real estate industry in Ghana.
Capital Gains Tax
A tax levied on the gains made from the sale of a property where the gain exceeds GHC500. Assets on which tax is imposed include land, buildings, business assets including goodwill and shares of a resident company. The rate of tax is 15 percent.
This is the tax paid by rental income earners on the gross amount earned in a year of assessment. The rate of tax is eight percent on the gross rent income. For tenants operating a commercial business, and other nonprofit agencies, the entity is expected to withhold eight percent of the gross rent paid to the landlord and make payment at the Domestic Tax Revenue Division (DTRD) of the Ghana Revenue Authority (GRA).
Real Estate VAT
In 2015, the government introduced a new tax on the real estate industry. This tax, which is meant to be an indirect form is a Valued Added Tax (VAT). The initial plan was to charge real estate developers 17.5 percent VAT. However upon deliberation with the various stakeholders in the industry, this was pegged back to five percent. Even though this new tax has divided opinions, it is expected that the low rate charge will help stakeholders and the general public come to appreciate the long-term benefits of the new tax.
Property tax is the levy charged on the estimated value of a property. This tax falls under the jurisdiction of the local assembly. In Accra, the Accra Metropolitan Assembly is the institution tasked with the collection of property tax. Due to Accra’s differing demographics, the Assembly has categorized them into zones, charging each zone according to the valuation of the area. For instance, a property located in Airport Residential Area would fetch at least GHC115 while one located in Kisseman would go for a minimum of GHC30. The determination of the property rate is however dependent on the determination of each property’s estimated value, meaning some rates may be higher than others, even within the same enclave.