As Ghana’s property market continues to thrive, particularly in the informal and semi-formal sectors, the government could turn its attention to the substantial revenue being lost due to untaxed property sales and rentals. With many individuals building, selling, and renting houses without paying taxes, the government could outline plans to broaden the tax net to capture this untapped source of income.
Currently, the property market in Ghana operates largely without formal tax regulation, especially among small-scale developers and landlords. Many property transactions between private individuals go unreported, and rental income, especially in high-demand urban centers like Accra and Kumasi, is often unaccounted for by tax authorities. This has resulted in significant lost revenue for the government, estimated to be in the millions of cedis annually.
Previous attempts to enforce tax collection in the property market was largely unsuccessful. There are indications the government may consider introducing a more structured property tax system, which could include capital gains taxes on the sale of properties and income tax on rental earnings. By enforcing proper registration and taxation of property transactions, the government stands to mobilize substantial revenue that can be directed towards national development initiatives such as infrastructure projects and social services.
Experts have suggested that the government could adopt a tiered tax system to address the complexities of the market. This would involve different tax rates for residential, commercial, and industrial properties, with the potential to provide tax incentives for affordable housing projects to promote development in underserved areas. Moreover, landlords would be required to declare rental income, with tax authorities actively monitoring compliance through digital platforms that track property listings and sales.
Enforcement remains a key challenge, and the government will need to strengthen its mechanisms by digitizing the property registration process, linking it with tax identification systems, and collaborating with banks, real estate agents, and utility providers to track property transactions more effectively. Additionally, local governments could play a critical role in enforcing property taxes, with the power to issue fines and penalties for non-compliance.
If implemented properly, experts estimate that the government could mobilize billions of cedis annually from property taxes alone, which would significantly contribute to closing the fiscal gap and funding public services. By bringing more transparency and accountability to the property market, the tax reforms would not only help increase government revenue but also provide a more equitable system for property ownership in the country.
As the government prepares to present its budget, all eyes are on the property sector reforms, with many stakeholders hoping for a more comprehensive approach that balances revenue generation with market growth and accessibility. This is because the price of houses are beyond many pockets and improper application of the tax system could further push up home prices.
