Like many markets, Trinidad has seen the number of property investors buying real estate dwindle in the last year and there are concerns that the prospect of higher property taxes will have a double whammy effect with some owners selling up and others being discouraged from buying.
Finance Minister Karen Nunez-Tesheira said the Government proposed to introduce a new four-tiered property tax regime on January 1, 2010 and this it would be based on the present market values of properties.
‘In the case of residential, commercial and agricultural properties, the tax will be three per cent, five per cent and one per cent, respectively,’ she explained.
But critics claim this could have a harmful effect on both the rental and buying markets with some real estate owners facing hikes of 600%.
‘These plans to restructure the property tax regime will bring a significant increase in property taxes which would have a devastating ripple effect on the population,’ said opposition MP Kamla Persad-Bissessar.
She used the guidelines and data provided from the Ministry of Finance to calculate the proposed property tax on four properties and compared it to the amounts that were paid by home owners at present.
According to Persad-Bissessar, the increase with the new system of property tax ranged from 100% to 600%.
‘No one shall escape. Whether you are a property owner or a tenant of property or a squatter you will bear the burden.
These increases will be massive. People who only paid a couple of hundred dollars before now may have to pay thousands of dollars,’ she said.
‘Not only property owners, but renters, too, will be affected as rents will increase everywhere. Property owners will be forced to raise their rates to pay the higher taxes, she added.
Persad-Bissessar said another of the consequences of an increase tax on residential properties would be higher mortgage payments since property taxes were included in mortgage payments.
And she said small business owners, who are tenants in shopping malls and other commercial properties, would suffer further from increases in their rent as landlords try to cope with the higher taxes on commercial properties.
