What is Property Tax?

Property taxes, also known as property rates, are mandatory financial contributions collected by the government based on the assessed monetary value of a real estate property. In Ghana, property tax is legally backed by the Local Governance Act, 2016 (Act 936). The  tax to be paid is dependent on the estimated value of the real estate structure.

What is taxable under Property Law In Ghana?

Immovable assets including buildings, estates, shops, skyscrapers, apartments and all other similar property require a property rate paid on them periodically.

Who is responsible for collecting Property Tax?

The Parliament of Ghana mandates the functions of District Assemblies which also include levying and collecting fees, duties, fees and taxes. Section 144 of Act 936 stipulates that the District Assembly is the only government agency responsible for levying property taxes for a district. Additionally, Metropolitan and Municipal assemblies also administer property taxes with each assembly having its own means of redeeming property rates from tax payers. For example, the Kumasi Metropolitan Assembly is the government agency responsible for taking property tax in Kumasi.  

What is the calculation for property rate in Ghana?

Property law in Ghana demands that a valuer from the Lands Commission must assess a property to determine its ratable value. The Municipal or District Assembly after receiving the ratable value then determines the value of the property from the rate impost (this is an amount per cedi, expressed in decimals and is multiplied by the ratable value to determine the property rate)

Furthermore, district assemblies can charge a general rate and a special rate that is appropriate to accumulate the needed funds required to foot the expenditures of the Assembly. Act 936 stipulates that a special rate is the basic amount payable by people living in a community who are between the ages 18 and 69.

According to Property Law in Ghana, the ratable value of a property is the replacement cost of the buildings and other structural developments that make up the premises after deducting the amount it would cost at the time of the valuation to restore the building to a condition where it would be serviceable as they were when new.

The ratable value cannot be more than fifty percent of the replacement cost for the owner-occupied building and should not be less than seventy five percent of the replacement cost in any other case.

Date and place of payment

After receiving notice of a property tax, a person legally responsible to pay the  tax must pay the amount to a rate collector or any person mandated or authorized by the District Assembly at the stipulated time and place by the rating authority..

Exemptions from and remission of property taxes according to Property Law in Ghana 

The following are exempted from assessment and rating:

  • Buildings that are mainly used exclusively for public worship and have been registered with the District Assembly
  • Buildings that are used as public hospitals and clinics
  • Buildings that have been approved by the minister of foreign affairs and belong to diplomatic missions
  • All Burial grounds and cemeteries  registered by the District Assembly
  • All public and charitable educational institutions that have been registered with the District Assembly
  • The following are excluded from the payment of basic rate:

  • People 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
  • People who are older than seventy years old.
  • Based on the poverty of a person liable to pay the rate, the authority may reduce or remit payment of any rate.A person who has paid the required amount of the rate payable for 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.The only exception is 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.

Additional forms of Property taxes mandated by Property Law in Ghana

Real Estate Value Added Tax

Real estate developers are mandated to pay a 5% indirect Value Added Tax (VAT). This property rate does not apply to residential properties. It is levied on commercial real estate buildings such as hostels, motels and hotels.

Ground Rent

This property tax is paid to the Lands Commission for repayment to the original owner of land such as traditional land owners in the case of Stool or Skin lands. Property law in Ghana demands that this fee is paid annually on all commercial and residential real estate.

Uses of property tax

Property rates are used to fund the construction of public facilities that benefit all Ghanaians. Public resources such as schools, hospitals, libraries, roads and stadiums are constructed with money raised through property taxes. 

Eden Heights as a real estate business has  judiciously adhered to the Property Laws in Ghana by paying appropriate property taxes since its inception.