Property tax or property rate is a real estate tax that is calculated on the assessed value of the property. It is known in Ghana as Property Rate. Property Rates are governed by the Local Governance Act, 2016 (Act 936).
This tax applies to Immovable structures such as houses, apartments, estates, a mall, skyscraper shops and any other immovable property.
According to Article 245 of the 1992 Constitution, Parliament has to prescribe the functions of District Assemblies. These functions include the levying and collection of taxes, rates, duties and fees.
S.144 of Act 936 states that the District Assembly shall be the only authority to levy rates for a district despite any customary law to the contrary. The metropolitan and municipal assemblies can also administer property rates. Each of the assemblies has its mechanism for collecting the property rate. In Accra, the Accra Metropolitan Assembly is the institution tasked with the collection of property tax. The determination of the property tax depends on the property's estimated value. Thus, some rates may be higher than others, even within the same enclave.
The property will be assessed by a representative (valuer) from the Lands Commission to determine the rateable value. This rateable value is then given to the Municipal or District Assembly. The assembly determines a value from the rate impost (an amount per cedi, expressed in decimals and is multiplied by the rateable value to arrive at the property rate)
The district assembly can levy a general rate and a special rate that may be deemed suitable to raise enough funds to cater for the expenditure of the Assembly. According to ACT 936 - The Act guiding property rate in Ghana, A special rate is a basic amount payable by persons residing within the community and are between the ages of 18 and 69. A special rate may also be an amount imposed on an owner of movable or immovable property in the area. However, a District Assembly in fixing the basic rate shall consult with district-level stakeholders in the district.
A person registered as a voter in a district may be required to pay rates imposed by the District Assembly for that district even if the person does not live in the district. Subject to the exemptions from and remission of rates, rateable premises comprise buildings, structures, or similar developments.
The rateable value of premises shall be the replacement cost of the buildings, structures and other structural development that comprises the premises after the deduction of the amount it would cost at the time of valuation to restore the premises to a condition in which they would be as serviceable as they were when new.
The rateable value shall not be more than fifty per cent of the replacement cost for the owner-occupied premises; and not be less than seventy-five per cent of the replacement cost in any other case.
Date and place of payment of rate 148. When a rating authority has given notice of a rate, a person liable to pay the rate shall pay the amount to a rate collector or other person duly appointed or authorised by the District Assembly concerned to collect and receive the rate at the time and place specified by the rating authority.
Exemptions from and remission of rates
The following tenements are exempted from assessment and rating:
premises appropriated exclusively for public worship and registered with the District Assembly;
cemeteries and burial grounds registered by the District Assembly;
charitable or public educational institutions registered with the District Assembly;
premises used as public hospitals and clinics; and
premises owned by diplomatic missions approved by the Minister responsible for Foreign Affairs.
The following persons are exempted from the payment of basic rate:
persons who are in attendance at an educational institution who do not receive any remuneration or income during that period, other than an allowance, loan or other grant provided for purposes of education including any sum received by a person in respect of temporary employment undertaken by the person during vacation from an educational institution
persons who are more than seventy years old.
The rating authority may reduce or remit payment of any rate on account of the poverty of a person liable to pay the rate.
A person who has paid the amount of the rate payable in respect of premises that have been demolished or removed during any financial year may apply to a rating authority to be refunded a proportion of the amount paid that the rating authority considers reasonable having regard to the circumstance except that where the demolition or removal is by order of the District Assembly or a court, a refund shall not be made unless the owner of the premises has given notice in writing to the District Chief Executive within fourteen days after the demolition or removal.
This is a fee paid to the Lands Commission for disbursement to the rightful owners of the land. In the case of Stool/Skin Lands, the disbursement is made to the legitimate traditional owners. This fee is paid annually on all residential and commercial real estate.
In 2015, the government introduced a new tax within the real estate industry. This tax is meant to be an indirect form of Valued Added Tax (VAT). Real estate developers were to pay a 17.5% VAT but upon deliberation with the various stakeholders in the industry, this was pegged at 5%. 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. The real estate VAT is levied on commercial properties such as hostels, motels and hotels. The real estate VAT does not apply to residential properties.
Paying your taxes does not have to be a dreaded task. Being aware of the purpose of these taxes helps potential buyers and homeowners be mindful of what their tax revenue is being used for. Examples of the uses of property tax include the construction of hospitals, roads, schools, etc. The breakdown of these taxes also makes it clear to the taxpayer, who exactly is collecting these taxes.
At Devtraco Plus, the company services do not end after the purchase. Our offices are available at your beck and call to assist with making payment for the various rates the building owner is obliged to pay.