Tax tightrope - Owners may be forced to sell some properties in balancing act to manage obligations, says Realtors Association
While some real estate owners will be marginally affected by the amendments to property tax rates and Government's revaluation of land, others may be forced to sell their holdings in order to manage their tax obligation, given the massive increases they are now facing, says Realtors Association of Jamaica President Edwin Wint.
"An increase in property value, under normal circumstances, would be a positive sign for property owners, and they would normally welcome it, were it not for the effect of the taxation," Wint said in an emailed response to questions about the likely impact of the taxes which become due April 1.
He said that developers and constructors would pass on to consumers whatever increase the measure might impose and that it might end up having a deleterious effect on land banks, which owners hold for future development.
"The recourse of some owners would then be to seek advice, probably from a valuation surveyor, in cases where they might have a good case for lodging an objection to the TAJ (Tax Administration Jamaica) on the property value," Wint said.
He said that such a situation would then trigger a review by the National Land Agency's (NLA) Land Valuation Division.
Wint said that it would be prudent for the Government to shorten the intervals used to revalue lands, an exercise that currently takes place every 10 years, in order to negate any catastrophic reaction from the public.
"The land revaluation exercise needs to be done at intervals shorter than 10 years to avoid this calamitous situation despite the cost associated with getting this exercise completed," he said.
In the meantime, Finance Minister Audley Shaw yesterday stressed that hundreds of thousands of property holders would benefit from Government's decision to adopt the 2013 valuation roll in tandem with significant reductions in the property tax rates, moving from the higher rates of 1.5 and 2 per cent to the much lower range of rates between 0.8 and 1.3 per cent.
Shaw said 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," Shaw said.
"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," he said.
Approximately 65 per cent of property owners will face various degrees of increase, while pensioners, golden-agers, and the disabled have been allowed access to a special discretionary relief package.
These mechanisms include:
1. 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 NLA. The NLA will be undertaking an educational campaign to sensitise the public further.
2. Where your land is in bona fide agricultural production, you may apply for agricultural derating relief for up to 50 per cent of the annual tax.
3. 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.
4. A taxpayer experiencing genuine hardship may apply for special discretionary relief through any of the municipal corporations.