In today’s dynamic Ghanaian real estate market, understanding the tax implications of your property purchase is just as crucial as finding the perfect home. The reintroduction of Value Added Tax (VAT) on real estate transactions in 2024 has added a new layer of complexity for homebuyers. Whether you’re a first-time buyer, an experienced investor, or a Ghanaian in the diaspora looking to secure property back home, understanding property VAT in Ghana could save you significant amounts of money and prevent unwelcome surprises at closing.
What is Property VAT and Why Was It Reintroduced?
Value Added Tax on real estate in Ghana has gone through several phases—sometimes removed to stimulate construction and homeownership, and other times reintroduced to boost public funding. With economic pressures rising, the government has reinstated VAT on property transactions to increase revenue while still encouraging growth in the housing sector.
The current system is designed with a dual-rate structure that offers preferential treatment to certain property types, particularly those supplied by estate developers. This strategic approach aims to balance revenue generation with continued support for the housing sector.
Current VAT Rates on Real Estate (2024)
Under Item 18 of the First Schedule to the VAT Act (Act 870), the Ghana Revenue Authority (GRA) has established a clear framework for which real estate transactions attract which VAT rates:
| Transaction | VAT Rate (%) |
| Houses or apartments supplied directly by an estate developer | 5% |
| Renting out commercial property (offices, hotels, warehouses) | 5% |
| Land sold for purposes other than agriculture or a dwelling | 15% |
| Civil engineering works, landscaping, or professional services | 15% |
Important Note: On top of these VAT rates, there’s an additional 1% COVID-19 levy applied to the same property value. This means your total tax could be:
- 6% (5% VAT + 1% COVID-19 levy) for properties from estate developers
- 16% (15% VAT + 1% COVID-19 levy) for other applicable transactions
Who Actually Pays the VAT?
A common misconception is that the buyer automatically pays VAT, but legally, the seller or developer is responsible for collecting and remitting it to the GRA. How this affects you as a buyer depends on how the property deal is structured:
- VAT Added on Top: The developer quotes a base price and then adds VAT and the COVID-19 levy as separate line items. This increases transparency but means you’ll pay more out-of-pocket at closing.
- VAT Included in the Listed Price: Some developers “build in” the VAT and COVID-19 levy to their advertised price. You won’t see separate tax lines—just one figure covering everything. This can be simpler but may cause confusion if you expect to see VAT detailed separately.
Pro Tip: Always ask this critical question: “Does this price include VAT?” This simple inquiry can save you from budget shocks, especially if you’re arranging financing.
Purchasing from Estate Developers: The 5% Advantage
Buying directly from an estate developer like Eden Heights offers a significant tax advantage with the lower 5% VAT rate (plus 1% COVID-19 levy). This 10% difference compared to other property transactions can translate to substantial savings.
For example, when purchasing a luxurious Three Bedroom Standard apartment at Eden Heights with a total area of 151.96 sqm:
- Purchase Price (No Tax Yet): GHS 1,000,000
- VAT (5%): GHS 50,000
- COVID-19 Levy (1%): GHS 10,000
- Total: GHS 1,060,000
Compared to a similar property that attracts the 15% VAT rate, you could save up to GHS 100,000 in taxes alone!
Special Considerations for Diaspora Buyers
If you’re a Ghanaian living abroad or a foreign national interested in Ghanaian real estate, it’s important to know that there are no special exemptions from VAT based on residency status. The same 5% or 15% rates (plus the 1% COVID-19 levy) apply to your purchase exactly as they would for a local buyer.
For diaspora buyers considering Eden Heights, the good news is that purchasing one of our premium residential units would qualify for the lower 5% VAT rate as we are an estate developer. The key is to confirm whether the advertised price already includes VAT or if it will be added separately at closing.
Tips for Navigating Property VAT in Ghana
- Budget Accurately: Factor in the additional 6% or 16% (VAT plus COVID-19 levy) when calculating your total purchase cost.
- Ask About VAT Inclusion: Always clarify whether quoted prices include or exclude VAT.
- Consider Developer Purchases: Buying directly from estate developers like Eden Heights qualifies you for the lower 5% VAT rate.
- Get Documentation: Request a detailed breakdown of all taxes and fees before finalising any purchase.
- Consult a Professional: Work with a knowledgeable real estate attorney who understands current tax regulations.
Eden Heights: Luxury Living with VAT Transparency
Eden Heights, located conveniently near West Hills Mall in Accra, offers not just luxurious living spaces but also clarity in our pricing structure. As an estate developer, properties purchased at Eden Heights qualify for the lower 5% VAT rate, making these premium residences even more attractive investments.
Our range of properties from Two Bedroom Apartments (115 sqm) to the opulent Penthouse Deluxe (356.58 sqm) provides options for different lifestyle needs. Each unit features spacious living areas, modern kitchens, and master bedrooms designed for comfort and luxury.
Beyond the tax advantages, Eden Heights offers exceptional amenities including a world-class sports complex with a football pitch, tennis court, basketball/volleyball court, gym, athletic field, and swimming pool. Coupled with comprehensive management services including 24-hour security and maintenance, it represents an ideal choice for discerning homebuyers who value both luxury and financial prudence.
Conclusion
Understanding the VAT implications of your property purchase in Ghana is essential for making informed decisions and avoiding unexpected costs. With the current dual-rate system, purchasing directly from estate developers like Eden Heights offers significant tax advantages with the lower 5% rate compared to the 15% applied to other transactions.
Whether you’re a first-time buyer or a seasoned investor, always factor in both the VAT rate and the additional 1% COVID-19 levy when budgeting for your property purchase. Remember to clarify whether quoted prices include or exclude these taxes to ensure complete transparency throughout the transaction process.
Frequently Asked Questions
1. Do I have to pay VAT if I’m buying my first home?
Yes, first-time homebuyers are not exempt from VAT. However, you can minimize your VAT by purchasing directly from an estate developer like Eden Heights, which qualifies for the lower 5% rate.
2. Can I get a VAT refund after purchasing a property?
Generally, individual homebuyers cannot claim VAT refunds on residential property purchases in Ghana. The VAT paid becomes part of your total acquisition cost.
3. How do I verify if a developer qualifies for the 5% VAT rate?
Legitimate estate developers should be registered with the GRA for VAT purposes. You can ask to see their VAT registration certificate or verify their status with the GRA directly.
4. Is VAT charged on land purchases in Ghana?
Yes, land sold for purposes other than agriculture or a dwelling attracts 15% VAT, plus the 1% COVID-19 levy. However, if you’re purchasing land as part of a residential package from an estate developer, the 5% rate may apply.
5. Do rental properties also attract VAT?
Yes, renting commercial properties like offices, hotels, and warehouses attracts 5% VAT plus the 1% COVID-19 levy. However, residential rentals have different tax treatments, and it’s best to consult with a tax professional for your specific situation.
Ready to experience luxury living with transparent pricing? Contact Eden Heights today to explore our range of premium residential options that combine opulent design, world-class amenities, and the benefits of the lower 5% VAT rate. Visit our show homes located just behind West Hills Mall or call us to schedule a personalised tour.
