Property Tax Demystified

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Property tax, like any other tax, is money most people would prefer not to pay if they could avoid it. But like every other tax, in an ideal system where all institutions actually perform the tasks they are responsible for conscientiously and without prejudice or bias, this is a very important source of funding for government. There are different forms of property tax: Property rates, Ground rates and the actual property tax. Our Accra Housing Guide has a great section on these and we go in-depth here.

  1. Property rates: This is a levy paid to the District Assembly. It is paid annually on both residential and commercial real estate.
  2. Ground rates: This is paid to the Stool/Skin Lands Commission, in the case of the property belonging to the Skin/Stool for disbursement among the legitimate traditional owners; or to the Lands Commission for disbursement to the rightful owners. This is paid annually on residential and commercial real estate.
  3. Income tax on rent received: Rent is a taxable income and landlords/landladies should declare such income and pay the required income tax on such. The tax should be calculated on the lump sum, if it was a one-time payment, or paid monthly if rent is received on a monthly basis.
  4. Property tax: this is an annual tax charged on every real estate property, including land and is payable to the Internal Revenue Service. It is payable on residential and commercial properties. Property tax, popularly known in Ghana as property rate, paid on immovable property, is collected annually under the auspices of the Ghana Internal Revenue Service (IRS). The Domestic Tax Revenue Service charged with assessing and collection of property related taxes determines how much is to be paid by Ghanaian property owners.

Property tax is levied annually by local authorities on the estimated value of the property, depending on the classification of the area where the property is located. Previous rates ranged from 0.5% to 3%. These rates were by far, the highest rates paid on properties in the capital, Accra in comparison with other regions of Ghana.

Recently, rate imposts for all the rating zones in Accra have increased to approximately 13.33%. With the recent increase announced, property owners in Accra will pay about 10% more in property taxes annually. To obtain how much property tax to pay for the year, multiply your property’s ratable value by the rate impost applicable to the property type and rating zone.

The best way to know how much property tax will be levied on your property is to know your rating zone or residential class. Below are some rating zones of the Accra Metropolitan Assembly (AMA):

  • Residential Class 1A:
  • Achimota Forest Residential, Roman Ridge, Airport West, East Legon, Ambassadorial Enclave, Ridge.
  • Residential Class 1B:
  • Zoti, Abelenkpe, Dworwulu, North Dworwulu, East Legon Extention, West Legon, Ringway Estates, Nyaniba Tesano-1.
  • Residential Class 2A:
  • South Odorkor, DansomanSSNIT, Addogon, New Dansoman Estates, Latebiokorshie, Candle Factory, Mamprobi, Kanda Estates, Dansoman Estates, NimaAkuffoAddo, Asylum Down, Naaflajo, GREDA Estates, New Achimota.
  • Residential  Class2B:
  • Kwashieman North, Sakaman-Busia, Abofu New Dansoman, Mataheko, OsofoDadzie, West AbboseyOkai, Dansoman Sahara, North Alajo, Adabraka, Tesano-2, Kaneshie, Borabora Estates, Awudome Estates, North Kaneshie, Abeka, Fadama, Apenkwa, North Kaneshie Estates–CFC, Akweteman.
  • Residential Class 3A:
  • Kwashibu, Kwashiman, North Odorkor, Odorkor Old Town, Kwashieman Old Town, Odorkor, Stanley Owusu, Banana Inn, KorleGonno, MamprobiSempey, Maamobi, Old Dansoman, Kotobabi Police Station, Kpehe, Alajo, Kotobabi, James Town, Manhean, Alogboshie, AbekaLapaz, Bubiashie/New Fadama, Kisseman/Christian Village.
  • Residential Class 3B:
  • AbosseyOkai, Sukura, Russia, Sabon  Zongo, Town Council Line, Mamponse, Tunga, Nima, Accra New-Town, Shiashie Village, Darkuman, Bawleshie  Mempeasem, Anumle, North Abeka, Old Bubiashie, NiiBoyeman/Achimota.
  • Residential Class 3C:
  • Chorkor ,Mpoase, Gbegbeise, Shiabu, Luga, Osu Amanfo/Alata.
  • Commercial Class 1:
  • CBD and Extended CBD
  • Commercial Class 2:
  • Extended Central Business District including Tudu, Osu Amantra, Osu Anorho, CDC, Kuku Hill, Airport West, Switch Back Road, Roman Ridge, Airport By-Pass, Police Quarters, and DVLA.

From these residential ratings, it is easy to surmise that property tax is dependent as much on the location as on the value of the property. Commercial class property pays the most tax whilst tax payers in the residential class 3C contribute the least.

Benefits of Paying Property Tax:

Property owners stand to gain, when all State institutions work as they should;

  1. Guaranteed security: The State is aware of you and your status as a legitimate property owner, it knows where you are, how to reach you, and how to address your needs as and when they arise.
  2. Legitimacy: You have all records of your ownership of the property including the title deed documents and copies of receipts of your periodic property tax payments on file with the State Authorities. These can be used to prove your legitimate ownership of the property in the event of any ownership dispute arising.
  3. Exercise of right to property: Attended by the responsibility of paying for the
  4. Easier Access to State Services: There are few or no obstacles to seeking redress or other services from the state if the need arises. Your legitimacy as guaranteed by your dutiful payment of taxes facilitates this access immensely.

Consequences of Non-Compliance:

In the event a landlord or other real estate property owner fails to

Possible consequence of not paying Property Tax
Your house could get repossessed if you don’t pay!

comply with the taxes and levies applicable to their property, and the bill accumulates past a certain threshold, and they are unable to pay the sum, the State could repossess and auction off all the defaulter’s properties, including but not limited to the real estate property, until the debt is paid off. In the event, the bill is still not cleared after all property has been sold off, the defaulter could file for bankruptcy, but would still be responsible for settling the bill at any time they get solvent again.

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