You may recall that the most recent land revaluation exercise was completed in September 2013 and reflected the values of properties as at July 1, 2013. The last one prior to this was completed in 2002.
Although the revaluation exercise was completed in September 2013, property taxes continued to be calculated on the old 2002 Valuation Roll.
This Government took the DECISIVE decision in 2017 to adopt the 2013 Valuation Roll, but with significant REDUCTIONS in the Property Tax Rates, moving from the higher rates of 1.5% - 2% to the much lower range of rates between 0.8% - 1.3%, on the new valuation roll.
The Revised Property Tax Rates
The adjustment to the property tax rates satisfies the criteria of Government’s broader Tax Reform objective of lowering and unifying the rates, as well as broadening the taxable base.
With the implementation of the new rates a large proportion of taxpayers will not suffer an increase of their property tax liability; approximately 210,512 or 27.1% will see a reduction in their property tax liability while another 61,835 property owners (8%) will experience no change in their property tax liability. This means a total of 272,347 landowners will pay less or the same amount of property taxes as they did last year. The remaining property owners will experience some increases in their property tax liabilities, with some larger than others. However, in the majority of cases, the increase in the property taxes is less than proportionate to the increase in the value of the land.
RELIEF FOR PERSONS HAVING DIFFICULTIES TO PAY
I wish to reiterate that where persons may have some difficulties in adjusting to the new rates, there are established mechanisms to assess the burden and provide some relief.
Persons dissatisfied with their land valuations have several remedies:
- Where you believe your valuation is too high
You may lodge an Objection (within 60 days of service of Notice) with the Commissioner of Land Valuations, at the National Land Agency (NLA). The NLA will be undertaking an Educational Campaign shortly to sensitize the public further on this matter.
- Where your land is in bona fide agricultural production
You may apply for Agricultural Derating Relief, for up to 50% of the annual tax.
- Where your land takes into account a potential use which is higher than the existing use, such as a Residence located in a Commercial Area:
You may apply for Statutory Relief
- Where One is Experiencing Genuine Hardship
A taxpayer may apply for Special Discretionary Relief through any of the Municipal Corporations, such as the KSAC.
The Government is committed to assist those persons who cannot afford to pay their property taxes. Relief is available to persons who are unable to afford to pay the tax and have at least one of the following characteristics
- financially challenged and/or the unemployed
- taxpayer who is suffering from a disability
- Where property is utilized in any business
The property tax payments made annually constitutes an allowable deduction for purposes of arriving at the income tax liability. The effect of this transaction is that unregulated businesses (like hotels as opposed to regulated entities such as banks and other financial institutions) would be able to reduce their income tax liability by 25% of the property tax paid. This is provided for in Section 13(f) of the Income Tax Act.
- Property Tax can be paid in Installments
Arrangements are in place for property owners to pay their land taxes in monthly, quarterly, semi-annually or annual installments.
- Landowners should also note that certain entities currently enjoy EXEMPTIONS from the payment of Property Taxes. These include, but are not limited to:
- Schools, including preparatory schools
- Government Lands
- Hospitals, including private hospitals
Special Treatment of Strata Properties
As I indicated to the House recently an innovative methodology will be applied to strata properties to arrive at their tax liability. The new methodology to be applied represents a departure from what currently obtains in respect of such properties where the band in which the property falls is determined by the unimproved value of the entire parcel of land.
The tax iscalculated and then apportioned to each strata lot proprietor based on unit entitlement. The new methodology requires that the value of each strata lot be determined first by apportioning the total value of the parcel by unit entitlement and each proprietor is then taxed in the band that accords with the value of their strata lot.
This means that if there are ten strata buildings erected on an acre of land which is valued at say $100 million, in the past each strata owner would pay a portion of the tax for the property which would be classified in the tax bracket of $100 million. Under this new revision that our administration is instituting, the $100 million will be split among the 10 strata owners and each will now pay taxes at the much lower rate of a property valued at $10 million.
This ensures that the proprietor of a strata lot is in the same position as a person who owns a town house for example and promotes equity across all property classes.
For further information contact:
Communication & Public Relations Branch
Ministry of Finance and the Public Service
30 National Heroes Circle