Can you not pay property tax? Learn about the requirements for tax exemption or reduction

The property tax is a municipal tax that taxes the value of land, buildings and facilities in urban and rural areas, based on their self-assessment. In this regard, since 2017 there is a benefit that allows adults over 60 years of age to be reduced or exempted from paying this tax, which previously only corresponded to pensioners. In the following note from La República, we explain how to request your reduction and exemption, as well as other details.

Property tax: how is self-assessment calculated?

According to Álvaro Gálvez, manager of the Legal Center of the Chamber of Commerce of Lima (CCL), in statements to the Andean agenda, the self-assessment is the amount that is established for the value of the property, be it a house, land or premises, with based on some criteria that are approved by the Ministry of Housing, Construction and Sanitation (MVCS).

In this sense, all owners are required to make this annual payment until February of each year, or it can be divided into four parts (February, May, August and November).

In the case of the property tax collected by the municipalities, it is calculated using a progressive scale that considers the self-assessment divided into Tax Units:

• If the value of the self-assessment is up to 15 UIT (S/24,750), an aliquot of 0.2% will be paid.
• If the self-assessment is between more than 15 UIT and 60 UIT, 0.6% of said value will be paid.
• If the self-assessment value is more than 60 UIT, 1% will be cancelled.

Property tax exemption: what are the requirements?

If you want to access the property tax discount or exoneration, an amount equivalent to 50 UIT (S/247,500) must be deducted from the value of your self-assessment. In other words, if this exceeds 50 UIT, the older adult will have to pay the difference. And if the property does not have a value greater than what is established, said tax will not be paid. To access this benefit, these requirements must be met, according to the Lima Chamber of Commerce.

• Be a citizen over 60 years of age.
• Having a single property that must be in your own name or that of the conjugal partnership.
• This property must be used for their housing, which can be used for productive, commercial or professional purposes with the approval of the respective municipality.
• Monthly income must not exceed 1 UIT (S/4,950).

In a previous interview with La República, tax lawyer Miguel Carillo used the following example: “If the self-assessment of my property is calculated at S/270,000, when it exceeds 50 UIT (S/247,500) this amount is subtracted, which yields a result of S/22,500. We place this amount on the progressive scale of 15 UIT, whose aliquot value is 0.2%. Then, from this equation it can be deduced that the annual property tax amount to be paid will be S/ 45 (0.2% of S/22,500 = S/45)”.

Property tax exemption: what is the procedure?

To request the deduction or not pay the property tax, the elderly must go to the municipality of their district, where they will have to present the following documents:

• ID of the owner or legal representative of the property
• Last pay slip or other document to prove personal or marital income.
• Copy of the document with receipt stamp.
• If the owner is declared a pensioner or turns 60, he must write a simple letter that is addressed to the municipality to determine the 2024 property tax, because this tax is only declared from January 1 to the last day of February.

Remember that if you own a property, you must pay property tax at the municipality of your district or province. If you live in Cercado de Lima, you must cancel it at the headquarters of the Tax Administration Service (SAT).

Similarly, this payment is mandatory for all natural or legal persons who, as of January 1 of each year, are owners of properties, whether they inhabit them or not. The only people exempted are pensioners and adults over 60 years of age, who meet the requirements mentioned above.