What is the Real Estate Tax Law? How would you calculate it for your property?
In this article, Aqarmap offers your more information about real estate tax law and ways to calculate it.
Real Estate Tax Law
It is about built properties, i.e. those which are already built. It is an old tax imposed by the Egyptian government starting from 1954 by law No. 56, and is known as “Awayed (dues)”. The new law has been redrafted to include the old laws regulating the real estate tax of all kinds.
This article will explain what the real estate tax law is, how you could calculate it for your property, and who shall pay for it.
Let’s start with who should pay the tax according to the Real Estate Tax Law; they are normal and legal persons who own properties and have the right to use it or benefit from it for a purpose. While the scope of the tax according to “Real Estate Tax Law” is all properties that have been built on Egyptian land, whether these properties are rented or used by its original owner, so he shall be charged with the tax according to the Real Estate Tax Law, whether it is occupied, unfinished or not occupied, this means all types of buildings, whether residential, commercial, etc., including but not limited to chalets, cabinets.
The Real Estate Tax Law also clarifies the status of the plots used for various activities, including, but not limited to, garages, greenhouse; whether it is rented, used for the benefit of others, or for the benefit of the original owner. The law shall not become effective when the plot is unutilized.
The Real Estate Tax Law has been amended to clarify the status of certain special types of properties, such as roof-top fittings, real estate facades in case they are rented, or if the installations are paid for or for a benefit. The definition of property itself i.e. in the real estate tax law is all residential and non-residential units within the same building and not the entire building. This explains the mistake of some people believing that the property is the whole building which is not true in the new law of the real estate tax law.
Before discussing the method of how to calculate the value of real estate tax, some important points have to be clarified, through which you will understand the nature of the law of real estate tax.
Properties that are not subjected to the Real Estate Tax Law:
- State-owned built properties that have been allocated for a public benefit.
- Buildings dedicated to religious ceremonies or teaching religion.
- Built properties that are expropriated for public benefit.
- Courtyards, and cemetery buildings.
- Buildings under construction are not taxable.
Properties exempted from real estate tax
Building related to the following:
- Real estate owned by registered associations, labor organizations, headquarters owned by political parties, youth and sports centers, educational institutions, hospitals, dispensaries, shelters, non-profit institutions.
- The real estate unit, which is a private and main residence for the family, has a net annual rental value of less than EGP 24,000, and more than that shall be subjected to tax.
- Each unit in a real estate Building used for commercial, industrial, administrative and professional purposes, which annual net rental value is less than EGP 1,200, and more than that shall be subjected to tax.
- Real estate owned by foreign government agencies, provided that it should be subjected to reciprocity fee. If there is no reciprocity in any foreign country, the Minister may, after taking the opinion of the Minister of Foreign Affairs, exempt the property from taxes.
- The houses allocated for use in social events without targeting profit, as: clubs, hotels of the armed forces, complexes and medical centers, military clinics and properties built within its scope.
After defining what is the real estate tax law and determining the scope of the law and the exemptions prescribed, we will explain the value of the tax and how it is calculated?
Real estate tax Rate
The tax rate is unified, 10% of the annual rental value, after deducting 30% housing expenses, and 32% for non-housing in addition to deducting both maintenance costs and expenses incurred by the taxpayer during payment.
Exemption of private housing:
The unit used by its owner, as a main residence for himself and his family and the net annual rental value is less than LE 24,000 shall be exempted from tax. Application shall be submitted on form 6, with his/her real estate wealth statement.
The exemption limit for non-residential units shall be LE 1200 of the net annual rental value. The exemption shall be applied to each unit within a property used for commercial, industrial, administrative and professional purposes.
The calculation of the tax according to the Real Estate Tax Law is shown in the following tables:
Calculation of the tax for housing purpose
The units were divided into: more than EGP 2,000,000, less than EGP 2,000,000, as shown in the below tables:
| Annual tax payable | Tax base | Net rental value | Annual rental value | Capital value | Market value | Unit |
| 120 | 1,200 | 25,200 | 36,000 | 1,200,000 | 2,000,000 | First |
| 750 | 7,500 | 31,500 | 45,000 | 1,500,000 | 2,500,000 | Second |
| 1,380 | 13,800 | 37,800 | 54,000 | 1,800,000 | 3,000,000 | Third |
| 2,010 | 20,100 | 44,100 | 63,000 | 2,100,000 | 3,500,000 | Fourth |
| 2,640 | 26,400 | 50,400 | 72,000 | 2,400,000 | 4,000,000 | Fifth |
| Annual-tax payable | Tax base | Net rental value | Annual rental value | Capital value | Market value | Unit |
| 126 | 1,260 | 1,260 | 1,800 | 60,000 | 100,000 | First |
| 189 | 1,890 | 1,890 | 2,700 | 90,000 | 150,000 | Second |
| 252 | 2,520 | 2,520 | 3,600 | 120,000 | 200,000 | Third |
| 315 | 3,150 | 3,150 | 4,500 | 150,000 | 250,000 | Fourth |
| 378 | 3,780 | 3,780 | 5,400 | 180,000 | 300,000 | Fifth |
Tax calculation for non-housing purposes
| Annual tax payable | Tax base | Net rental value | Annual rental value | Capital value | Market value | Unit |
| 2,4 | 24 | 1,224 | 1,800 | 60,000 | 100,000 | First |
| 63,6 | 636 | 1,836 | 2,700 | 90,000 | 150,000 | Second |
| 124,8 | 1,248 | 2,448 | 3,600 | 120,000 | 200,000 | Third |
| 247,2 | 2,472 | 3,672 | 5,400 | 180,000 | 300,000 | Fourth |
| 492 | 4,920 | 6,120 | 9,000 | 300,000 | 500,000 | Fifth |
How to calculate the real estate tax
| Residential | Non- Residential |
| Annual rental value is EGP 36,000 | Annual rental value is EGP 27,000 |
| Net annual rental value = annual rental value * 70% |
Net annual rental value = 36,000 * 70% = 25,200. Net annual rental value = annual rental value * 68%.
Net annual rental value = 27,000 * 68% = EGP 1,836. Tax base = Net annual rental value – Exemption limit.
Tax base = 25,200 – 24,000 = EGP 1,200. Tax base = Net annual rental value – Exemption limit.
Tax base = 1,836 – 1,200 = EGP 636. Tax = Tax base *10%.
Tax = 1,200 * 10% = EGP 120 per year. Tax = Tax base * 10%.
Tax = 636 * 10% = EGP 63.6 per year.\