Ethiopia’s real estate industry started growing in the early 1990s. The growth spiked after 2002 when the government encouraged condominium construction. This growth has boosted the economy and benefited earners in the middle and high-income brackets. But, there’s a trust issue between developers and home buyers due to poor regulation.
The industry still grows despite these issues. Contractual arrangements and the Civil Code govern it. Housing prices often appear in US dollars to lessen the devaluation effect, but people make payments in Birr. Laws about condominium housing, urban land lease holding, buildings, and the tax regime also regulate the industry.
During a sale, a real estate developer faces various taxes. These taxes affect buyers differently, depending on whether they are an entity or an individual. Real estate developers primarily deal with the capital gains tax, while buyers face a 15% capital gain tax. Other taxes include withholding tax and value-added tax (VAT).
When a contract gets registered before the relevant government authority, it is considered as the transfer of immovable properties. The Land Administration Office charges a two percent stamp duty tax from both the buyer and seller. The capital gains tax, also known as “Ashura”, is the most significant tax obligation.
