In Egypt, three primary taxes are imposed on real estate: the real estate tax, the real estate wealth tax, and the real estate transaction tax. Each of these taxes serves a distinct purpose, is computed differently, and has unique exemptions and penalties. Property owners must understand these differences to ensure legal compliance and avoid penalties.
Understanding Real Estate Taxation in Egypt
The tax laws in Egypt define real estate as any building or space designated for any type of activity within Egypt, whether it is a building, vacant land, or fenced land, utilized or not. This definition determines whether individuals or legal entities are considered residents. If an individual or legal entity meets certain conditions, including having a workplace in Egypt, they are deemed residents and are subject to Egyptian laws. Hence, the concept of real estate in Egypt is critical, and the handling of real estate transactions is important, as profits from such transactions are considered taxable income. The primary purpose of this is to facilitate comprehensive accounting for various tax systems in Egypt.
It is essential to understand the types of real estate transactions in Egypt, as each type creates a different taxable entity, subject to different concepts and methods. For example:
- When disposing of real estate: This generates a taxable entity for real estate transaction tax, subject to a specific rate and base, as detailed below.
- When renting out real estate: This creates a different taxable entity, namely the real estate wealth tax on income generated from renting out the property, whether empty or furnished.
- The property itself: This generates the real estate tax entity under the conditions and specifications outlined in the attached table.
All this and more can be found in the simple comparison below:
|
Real Estate Tax |
Real Estate Wealth Tax |
Real Estate Transaction Tax |
|
|
Law |
91 of 2005 |
91 of 2005 |
|
|
Type of Tax |
It is an annual tax levied on built real estate properties within Egypt. |
It is a new tax that was first implemented in 2023. It is levied on the net wealth of real estate properties owned by individuals and companies. |
It is a tax levied on the sale and purchase of real estate properties. |
|
Basis of Tax |
The basis is the net annual rental value of the property. |
The basis is the net wealth of real estate properties owned by individuals and companies. |
The basis is the value of the real estate property sold or purchased. |
|
Who Pays the Tax |
The owner of the property. |
The owner of the property. |
The buyer or specified proportions. |
|
Due Date |
Annual basis during December. |
Annual basis during March for natural persons and April for legal persons. |
Within 30 days from the date of signing the sale and purchase contract. |
|
Exemptions |
Some properties are exempt from real estate tax, such as: residential units with an area not exceeding 60 square meters, properties owned by people with disabilities, and properties owned by pension recipients on condition that the pension value does not exceed 1000 Egyptian pounds. |
Residential units with an area not exceeding 200 square meters, properties owned by people with disabilities, and properties designated for temporary residence such as hotels and lodges are exempt from real estate wealth tax. |
There are no general exemptions from real estate transaction tax, but there are some cases where the tax value is reduced, such as: sale between family members and sale for investment purposes. |
Conclusion
It is crucial for property owners in Egypt to be aware of real estate tax, real estate wealth tax, and real estate transaction tax. Understanding the distinctions among these taxes helps ensure compliance with the law and avoidance of penalties.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.