Property sellers and lessors must have a working knowledge of taxes, laws and regulations to make informed decisions. The same applies to buyers, investors and even tenants with regards property transfers, sales, leases, etc., to make sound decisions.
What is Property Tax?
Tax on immovable properties (land, apartment, etc.) must be paid each year by September 30th. The owner registers at his / her local tax branch and completes the PT01 and PT02 forms.
- PT01 provides information about the property
- PT02 is the tax application form
Original identification and property ownership documentation is required. Property Tax is calculated as 0.1% of the property value as determined by the Immovable Property Assessment Committee. Calculation is based on location, materials and government data. Owners must pay this tax if the property value is over $25,000 with exemptions for agricultural land, state land, and industrial locations.
Things you need to know about the Transfer Tax
Buyers must pay Transfer Tax (or Stamp Duty), payable on completion of a sales transaction, calculated as 4% of the property value according to government valuation or the actual transaction price.
Where does the Withholding Tax apply?
This tax applies to rental properties and the tenant pays 10% Withholding Tax. The landlord is responsible for withholding this and the lessee acts as the withholding agent and pays on his/her tax return. When buying condos 10% VAT applies on the purchase price.
Who Pays Rental Tax/Income Tax?
Locals and foreigners who own and rent out properties must pay Rental / Income Tax annually. A foreign investor who buys property and rents it out pays 14% of the gross rate. For locals, the rate is 10%. If you want more reliable information regarding taxation, please get independent legal advice.