Dalia, Friday, 8 November 2013
This article is part of a series of 8 articles about buying property in Egypt. The other articles in the series cover the following topics:
Buying property in Egypt can seem daunting at first, especially to a foreigner. Will I be able to easily find and purchase a property with the
specifications I have in mind? Will I be able to manage my property from aboard? Can my relatives inherit my investment? But perhaps the single most
important question anyone – foreigner or not – has on their minds when deciding on buying property is how much it will cost. How much will I have to
end up paying? What does the price of this purchase include? Will I have to pay taxes? Will I be able to get home insurance? How about lawyer fees?
These are all rational questions which are roaming around aimlessly in your head. Take a deep breath, and in the following paragraphs we will try to
explain all fees that go into the buying process.
In Egypt, the buying process all starts with retaining a lawyer with a good amount of experience in this field of expertise under his belt. This
lawyer will be responsible for getting all your paper work in order, finishing all the necessary process and transactions required for buying
property. This means you are required to give your lawyer the right to act on your behalf which means signing a piece of paper to prove that in any
Egyptian court. This is referred to as "power-of-attorney" and this power granted upon the lawyer will prove beneficial in more ways than one,
especially since all documents must be present in both Arabic and English. The fee for the power-of-attorney is on average $500, and the lawyer's
are usually set at 3% of the purchase price.
Foreigners are not required to have a residency visa to purchase property in Egypt, but it does prove quite necessary when it is time to grant your
lawyer power-of-attorney. There are two types of visas: an entry visa which you need for purposes other than tourism, and a tourist visa which is
valid for three months. The fee for an entry visa is $15 and can even be obtained on arrival. This type of visa is valid for travel within three
months from its issue date, and your stay can be extended to longer than that at the ministry of interior affairs in Egypt. Your lawyer will state
your reason for staying in Egypt and, if accepted, you will be give your residency visa. This process will probably take no longer than two months.
In Egypt, home insurance covers the contents of your home in the case of vandalism, theft, fire, or water damage. It is specific to each case since
the cost of home insurance depends for the most part on what it would cost to restore your home as well as any further contents you have insured in
addition to your home.
Subsequently there is the important step of registering your property via your aforementioned lawyer in the Egyptian courts. This registration fee is
determined by location and market value of the property. The good news, however, is that it has a minimum limit of 500 EGP and a maximum limit of
2,000 EGP. Below is a table that states each property size in square meters with its corresponding registration fee in Egyptian Pounds.
|Property Size (sq. m.)
It is also worth mentioning that homes whose property value exceeds 1,195,779.36 EGP there is a pay duty of 1% while homes whose property value is
under 493,605.44 EGP are not obligated to pay purchase tax.
Following that, you, your lawyer, and the seller must sign forms and contracts among which determine how the property will be paid for; full in cash,
or in installments. In order for the transfer of property to be complete and final, the sale must be registered at the local real estate department.
The fee of the real estate department registration depends on the size of the property and ranges from 2.75% to 3.30%. There is also a 10% sales tax
that is included with that. Once everything has been paid in full, then the seller has to pay what is called a transfer tax which is set at 2.5% of
the property value. All the taxes mentioned in this paragraph are paid solely by the seller.
In Egypt, there are no inheritance taxes or capital gains taxes on property sales. The lack of inheritance tax is because of the Islamic rules and
regulations which the government of Egypt adheres to. The lack of capital gains tax is because it is charged on gross gains which is therefore,
classified as a transaction cost. This is imposed on the sale of land and/or buildings within the boundaries of any Egyptian city. The fee of this
transaction is 2.5% of the gross gains of the seller.