New T&T property tax to be based on rental value

When Finance Minister Karen Nunez-Teshiera presented her budget Monday she stated that the current system of calculation of property taxes is outdated and inefficient. And she announced that starting on Jan. 1, 2010 a new tax regime would take effect.

This is what she said:

"We propose to implement a new four-tiered property tax regime based on present market values of properties. In the case of residential, commercial and agricultural properties the tax will be 3 percent, 5 percent and 1 percent respectively. In the case of industrial properties, the tax will be 6 percent of the annual taxable value which is based on 6 percent of the installed cost of plant, machinery and associated buildings."

The minister also stated the system will adopt the rental value appraisal method (page 33, budget speech)

That still means that there will be a signficant tax burden for prooperty owners.

A report in the Trinidad Express Wednesday said several experts have suggested that the system will force homeowners and commercial customers to pay thousands of dollars in new taxes and will also affect mortgage activity.

It quoted economist Dr Patrick Watson as saying that the property tax regime will "increase the burden of an already overburdened middle class" in the country. The paper said the new system assesses properties on a rental value appraisal method and charges three per cent for residential properties and five per cent for commercial customers.

The Valuation Division will now assess properties based on how much money could be collected if they were rented and a percentage of this amount will constitute the new tax, the paper said.

The Express said the opinion of Jean de Meillac, general manager of Terra Caribbean is that a Woodbrook home worth $1.2 million and which could be rented for about $9,000 a month would now incur $3,000 a year in residential tax instead of current rates of about $120 a year.

The paper quoted him as saying the increased taxes could also keep real estate prices distressed and prices could soften further. It also quoted Ingrid Lashley, general manager of the Trinidad and Tobago Mortgage Finance Company, as saying taxes could impact on household income and would have an impact on the market.