UGANDA, Kampala | Real Muloodi News | In the ongoing discussions surrounding the proposed five per cent withholding tax on gains from land and rental property sales, the fairness of property taxation assessments has emerged as a central concern.
While various stakeholders offer valid perspectives on the matter, one critical aspect that demands attention is the methodology of assessment and the involvement of qualified professionals.
At the forefront of this dialogue is Mr Ivan Mulumba, a distinguished valuation and real estate consultant who serves as the principal of Corundum & Associates.
With his extensive expertise in property valuation, Mr Mulumba sheds light on the importance of ensuring fairness and accuracy in property taxation, particularly in light of the proposed tax increment.
The debate underscores a fundamental distinction between value and price in property transactions. While price represents the actual amount paid for a property, value encompasses the perceived worth of the property to the buyer.
To ascertain an equitable tax burden, it is imperative to employ methodologies that accurately reflect property value rather than simply relying on transaction prices.
In this regard, Mr Mulumba emphasises the indispensable role of registered valuers accredited by the Surveyor’s Registration Board.
These professionals bring a wealth of academic and practical experience to the valuation process, considering a myriad of factors to arrive at comprehensive and objective assessments of property value.
The significance of this approach becomes evident when considering the potential implications of alternative valuation methods.
For instance, using compensation awards, which may include a disturbance allowance, as the basis for property value could inadvertently burden compliant property owners with inflated tax obligations.
In jurisdictions where property taxation is based on assessments compiled in valuation rolls, the need for professional valuations is even more pronounced.
These evaluations, conducted for various purposes such as sales, purchases, lending, and compensation, provide a robust foundation for equitable taxation.
However, challenges arise when taxation relies solely on sales agreements, which often involve undisclosed payments to intermediaries and lack regulatory oversight.
Mr Mulumba underscores the inherent limitations of this approach, advocating instead for assessments conducted by registered valuers to uphold fairness and accuracy.
Despite concerns about the perceived costliness of valuation reports, Mr Mulumba asserts their indispensable role in facilitating accurate property assessments.
Unlike sales agreements, valuation reports offer a comprehensive analysis that considers factors such as renovations, changes in land status, and market dynamics.
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