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Sunday, 18 November 2018

Parliament overhauls proposed amendments to Real Estate Tax Act

LEGISLATION WATCH- Parliament changes-up proposed amendments to Real Estate Tax Act: The House Housing Committee has completed drafting a revised version of proposed amendments to the Real Estate Tax Act and has returned the bill to the Madbouly Cabinet for review, according to Al Masry Al Youm. The proposed changes appear to significantly water-down the original bill, which covered everything from the new real estate tax formula to how rented properties will be taxed and avenues for appeal. Housing Committee chair Rep. Alaa Waly had said last month that President Abdel Fattah El Sisi had called for the amendments to be “revisited” to be more considerate of low-income citizens.

Revised real estate tax formula: The revised amendments would set the annual real estate tax formula at 10% of its annual rental value, after excluding maintenance expenses from the total — which are set at 20% for residential properties and 15% for non-residential properties. The original version had set the maintenance expenses at 30% and 32% for residential and non-residential properties, respectively. The tax formula for industrial and tourism properties, as well as mines, quarries, airports, and ports, would be based on the size and land value of the property. The amendments would also see the real estate tax increase 10% each year for all properties.

Unused land would be subject to half of the annual tax as long as it remains unused. The original amendments had revised Article 9B of the law to say that only land in use will be subject to a real estate tax.

A number of articles are also on the cutting board: The original amendments would have seen a government property census, which would be used to determine the market value of assets on which their annual rental value would be calculated, take place once every seven years, instead of five. The new amendments would scrap that article altogether. The revised amendments would also scrap an article stipulating that the rental value of a property is equal to 1.8% of a property’s market value, which will be determined by the Tax Authority during appraisals.

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