Everything You Need to Know About Property Tax Exemption in Egypt

Property tax exemption is a topic of interest to many individuals, as they want to know whether they are obligated to pay or are exempt, and on what basis the exemption is made. But before knowing which properties are exempt from taxes, you must first understand what property tax is and how to calculate it.

What is property tax?

It is a tax imposed by the state on real estate, and it is considered a means that the government relies on to collect data on real estate. It is a relatively new type of tax that was imposed on real estate and residential buildings under Law 196 of 2008. The value of this tax is estimated as a fixed percentage of the rental value of the property annually. This tax applies to the owner, beneficiary, or consumer of any type of property, whether apartments, buildings, villas, chalets, companies, shops, or utilized vacant land.

Types of properties subject to property tax:

● Properties that are rented or where the owner resides.
● Complete and occupied properties, complete and unoccupied, and incompletely occupied.
● All property types, such as villas, buildings, houseboats, and chalets, regardless of their location.

The tax is also imposed on:

● Utilized vacant lands (such as rented garages, plantations, ect), with the exception of unexploited vacant lands.
● Billboards on the roofs or facades of real estate if they are rented or in exchange for a benefit or a fee.

In the new law, each residential or non-residential unit in a building is considered “property”, not the entire building.

How do you calculate property taxes for your apartment?

The tax rate is unified at 10% of the annual rental value, after deducting 30% of expenses for residential units and 32% for non-residential units. This deduction includes all expenses incurred by the taxpayer, including maintenance expenses.

What are tax-exempt properties?

1) Buildings of labor associations and organizations: designated for their offices or purposes.
2) Non-profit institutions: educational institutions, hospitals, clinics, and shelters.
3) Political party headquarters: provided that they are used for their designated purposes.
4) Private real estate unit: If its net annual rental value is less than 24,000 pounds.
5) Small commercial and industrial units: If their net annual rental value is less than 1,200 pounds.
6) Youth and Sports Centers: Established in accordance with the laws regulating them.
7) Foreign governmental properties: on the condition of reciprocity or by decision of the relative minister.
8) Non-profit social buildings: designated for social events.
9) Armed Forces properties: includes clubs, hotels, complexes, medical centers, and military hospitals, as determined by the Minister of Defense.
10) Properties rented using rent determination systems: in accordance with the provisions of Laws No. 49 of 1977 and 136 of 1981 and previous laws, until the legal termination of the rental relationship.

Necessary procedures to apply for property tax exemption:

Submission of the application:

● Use Form 6 for real estate units with an annual rental value of less than 24,000 pounds.
● Fill out Form 6 duplicate to state real estate wealth, showing all units or properties that the taxpayer owns or benefits from.

Determine the housing unit:

● Specify the housing unit in which the taxpayer and his family reside in Form 6 and 6 duplicate.

Required Documents:

● A copy of the national ID card of the person responsible for paying the tax.
● A copy of the ownership contract for the property or residential unit, or any document proving use of the unit and proof of the applicant’s ownership.
● A copy of one of the utility receipts (electricity, water, gas) for the real estate unit.

The procedure to be followed when the reason for tax exemption no longer exists:

If the reason for the tax exemption no longer exists, the person responsible for paying it must submit a declaration to the relevant tax office within sixty days from the date the reason for the exemption terminates. The property will be re-taxed starting from the first of January of the year following the date on which the exemption ceases.

Fines for evading property taxes:

It is worth noting that the law stipulates a specific penalty for any citizen who evades paying property taxes. A criminal case will be initiated against them, and a fine ranging between 1,000 and 5,000 pounds will be imposed, in addition to the compensation equivalent to the value of the tax owed by them in the first place. These penalties are applied to every taxpayer who violates the law and evades tax payment.

Inquiry about property taxes:

1) Visit the official website of the Real Estate Tax Authority.
2) Fill out a property tax inquiry form that includes the following data: (city or center, residential area, full address, unit owner’s name, national ID, phone number, email).

If you wish to buy or sell any property in Egypt, we advise you to deal with distinguished real estate consultants to help you with the detailed steps that you must take. Contact RE/MAX Egypt through the number +20222692004 or contact us here.