Recent Changes to Egypt's Property Sales Tax Law Explained

Did you know Egypt's real estate transaction tax could cost you up to 40% more if paid late? This little-known penalty catches many property buyers and sellers off guard, turning what seems like a simple 2.5% tax into a financial headache. Whether buying your first home or managing a commercial portfolio, understanding the latest changes to Egypt's property transfer tax law could save you thousands. Here's what changed in 2024 and how to navigate the system without overpaying.

What is the Real Estate Transaction Tax in Egypt?

The Real Estate Transaction Tax (Commonly called "Property Sales Tax") is a one-time tax imposed on the transfer of property ownership, typically paid by the seller. The tax rate is 2.5% of the property’s official sales value (as determined by the tax authority) or the actual sale price (whichever is higher). This tax applies to sales, gifts, and inheritances of properties with some exemptions, such as first-time homebuyers (for properties under EGP 2 million) and transfers between direct family members (spouses, parents, and children). The buyer must also pay registration fees (1-3% of the property value) to finalize ownership transfer at the Notary Public.

Who is Obligated to Pay the Real Estate Transaction Tax in?

The real estate transaction tax (2.5% of the property value) is primarily the seller’s obligation, whether selling, gifting, or transferring property ownership. However, if the seller fails to pay, the buyer may become liable to ensure the tax is settled before finalizing the transfer at the Notary Public. Certain transactions are exempted, such as inheritance between direct heirs (spouses, parents, children) and first-time home purchases below EGP 2 million. Commercial property transfers, however, rarely qualify for exemptions. Both parties should verify tax liabilities early to avoid delays or penalties.

Latest Amendments to Egypt's Real Estate Transactions Tax Law

Egypt recently introduced key amendments to the Real Estate Transactions Tax Law (governed by Law No. 196 of 2008 and subsequent updates). These changes aim to boost homeownership, curb tax evasion, and digitize compliance. The most significant changes include:

1. Higher Threshold for First-Time Homebuyer Exemptions The exemption cap for first residential property purchases increased from EGP 2 million to EGP 3 million (2023 amendment), provided the property is under 200 sqm.
2. Stricter Penalties for Tax Evasion Failure to declare property transactions now incurs a fine of up to 40% of the owed tax (previously 20%).
3. Digital Tax Payments Mandatory All transaction taxes must be paid electronically through the Egyptian Tax Authority’s portal (No cash payment accepted).
4. Temporary Reduction for Commercial Properties A discount of 50% (2024 initiative) applies to transaction taxes for one year on industrial/commercial property transfers for investment stimulation.

The Exemptions from the real estate transaction tax in Egypt

Real Estate Transaction Tax (2.5% of property value) includes several key exemptions to reduce burdens on specific transactions.

• First-time homebuyers are exempt from properties valued under EGP 3 million (2023 amendment), provided the unit does not exceed 200 sqm.
• Transfers between immediate family members (spouses, parents, children) through inheritance or gifts are tax-free.
• Additionally, government entities, charities, and religious institutions (e.g., mosques, churches) are exempt when acquiring properties for non-commercial use.
• For inheritance cases, heirs pay only registration fees (1–3%) if the property is not sold.
• Commercial properties generally do not qualify unless covered by temporary incentives (e.g., 2024’s 50% industrial property discount).

How to Calculate Real Estate Transaction Tax

Calculating Egypt’s Real Estate Transaction Tax (2.5%) correctly can save you from penalties or overpayment. Here’s how to determine your tax liability:

1. Determine the Taxable Value The tax is 2.5% of the higher value between:

• Official Government Valuation: The Egyptian Tax Authority (ETA) sets it based on location, size, and property type.
• Actual Sale Price: The amount agreed upon in the sales contract.

2. Apply Exemptions (If Eligible)

• First-Time Homebuyers: No tax if the property is: ≤ EGP 3M in value and ≤ 200 sqm.
• Family Transfers: Exempt for spouses, parents, and children (inheritance/gifts).
• Commercial properties do not qualify for these exemptions.

3. Calculate the Tax

Use Wafeq's Percentage Calculator to calculate your real estate transaction tax.

4. Add Registration Fees (Buyer’s Cost)

• 1–3% of the property value (paid to the Notary Public).
• Typically, 2% for residential properties.

While the 2.5% tax is straightforward, small errors in valuation or exemptions can cost thousands. Double-check with the Egyptian Tax Authority or a legal advisor before finalizing your property transactions.

Also Read: Real Estate Tax Exemptions in Egypt: Who Qualifies & How to Apply.

Frequently Asked Questions about Real Estate Transaction Tax

What are the real estate transaction tax payment locations in Egypt?

The real estate transaction tax (2.5%) must be paid electronically through the Egyptian Tax Authority’s (ETA). Physical payments are no longer accepted. After online payment, buyers and sellers must submit the tax receipt along with property documents to the Notary Public Office (الشهر العقاري) to complete the ownership transfer.

What is the penalty for not paying the real estate transaction tax?

• a monthly late penalty of 2% of the unpaid amount, capped at 40% of the original tax due.
• Additionally, the property's transaction cannot be legally registered until the tax and penalties are settled, blocking the ownership transfer.
• The Egyptian Tax Authority (ETA) may also freeze the seller's assets or take legal action for prolonged non-payment.
• In cases of deliberate tax evasion (e.g., underreporting the sale price), offenders face a one-time fine of 40% of the evaded tax, plus potential criminal charges. Buyers risk invalidating their purchase contracts if taxes remain unpaid.