Ministry of Finance amends rental value for properties

Property sales taxes will be redefined

The Ministry of Finance (MoF) has issued a memorandum to reduce the minimum property rental value to four percent of the property sale value.

According to the Built Property Tax Law, the rental value of a property is the basis for calculating built property taxes. The previous minimum rental value was equivalent to five percent of the property sale value.

For non-rented properties, the estimated rental value will be based on the rental value of same-size properties in similar conditions and locations. If there is no basis for comparison, the estimated rental value will be determined based on a property’s size, location, amenities, etc. In both cases, the rental value should be equal to four percent of the property sale value, instead of five percent.

The MoF memorandum aims to be more fair towards new landlords. In some regions, the recent surge in real estate prices was not reflected in properties’ rental value. This value was lower than five percent of the properties’ sale value.

In parallel, the taxes on built property sales will be redefined accordingly. These taxes will be calculated according to the following formula: Rental value / 4 x 5 x 12.5.