Many people invest in houses or apartments. Real estate can bring extra income and is often a safe investment. But owning property also comes with obligations. One of these is paying property tax and filing the right tax forms on time.
Tax Liability
Property tax is due from the person who has the right to use the property as owner on January 1 of the calendar year. This also applies to buildings on land leased from the Country Curaçao. In those cases, the tax is usually charged to the lessee. Property tax is assessed at one fixed point in time. Whoever has the right to use the property on January 1 must pay the tax for the entire year. A sale or transfer later in the year does not change this. The situation on January 1 is decisive.
If a property has more than one owner, the Tax Authorities may issue one joint assessment. They do not have to determine who owned what share or issue separate assessments. They may choose which owner receives the assessment. The tax is collected from that person, regardless of any private agreements between the owners. All owners remain jointly liable for the full tax amount.
Filing Obligation
New owners or users must file a tax return within two months after acquiring the property. Owners or users who do not receive an assessment in a calendar year must file a tax return within two months after the end of that year. If the value of a property increases by more than 25,000 guilders, for example due to construction or renovation, this must be reported within two months after the change. Failure to file may lead to a penalty if too little tax is paid. The penalty is 100% of the underpaid tax and is imposed together with the assessment.
Tax Base and Valuation Date
The value of a property is set for a period of five years. The valuation date is the moment when the first assessment in that period is issued. The value is based on the price the property would fetch in a regular sale. This assumes the property can be sold freely, without restrictions, and that the buyer can immediately and fully use it. If a sale price is agreed between independent parties, that price is generally accepted as the correct value. Only if the Tax Authorities have doubts must they prove otherwise. For commercial properties, economic conditions in the relevant sector may also be taken into account.
Tax Rate
Property tax uses a progressive rate ranging from 0.4% to 0.6%. Higher-value properties are taxed at a higher rate. The aim is to tax lower-value homes less heavily and higher-value properties more.
Exemptions
Several properties are exempt from property tax. Cemeteries and crematoria are exempt. Buildings used for non-commercial education are also exempt if they are owned by the Country or a non-profit foundation.
Publicly accessible nature areas are exempt, regardless of whether they are owned by a foundation or a private individual. Sports fields and sports facilities are also exempt.
Reassessment
A new valuation applies if the property changes significantly, for example due to construction, renovation, demolition, damage, or a change in use. The new value is based on the condition of the property at the start of the calendar year following the change. A decrease in value may result from fire or other damage. A general drop in the real estate market is not a reason for a lower valuation. The same applies to market increases. A reassessment only takes place if the value changes by more than 5% and the difference is at least 25,000 guilders. Both conditions must be met.
A recent court case confirmed this rule. A property was purchased in 2020 for 390,000 guilders. The value for 2019 had already been assessed for the previous owner, who did not object. In 2023, the new owner objected to the assessments for 2021–2023. The objection was rejected because it was not filed in the first year of the five-year period.
The court ruled that becoming owner at a later date does not give a new right to object. The law clearly limits when objections are allowed during the valuation period.
Conclusion
Property tax is based on who owns or uses the property on January 1, the property’s value, any significant changes, and applicable exemptions. For advice on a specific situation, it is recommended to contact a tax advisor.
By Lennart Huijsen, Partner and Tax Advisor at Grant Thornton Curaçao and Haesle Soerka, Tax Advisor at Grant Thornton Curaçao.
