With the exception of the Government and certain exempted organisations, such as churches and schools, property tax is to be paid by all property owners in Jamaica. Under the Property Tax Act (the PTA) the Commissioner of Inland Revenue: “shall cause to be assessed the property tax payable by every person in possession of property liable to property tax”.

What is important to note is that the person in possession may not necessarily be the owner of the property. ‘Person in possession’ means “the owner, occupier, mortgagee in possession or person in actual possession of such property”.

Property tax is calculated on the unimproved value of land. The Land Valuation Act (the LVA) provides the basis for the calculation of property tax and defines ‘unimproved value’ as follows:

“(a) in relation to unimproved land, the capital sum which the land might be expected to realise if offered for the sale on such reasonable terms and conditions as a bona fide seller would require;

(b) in relation to improved land the capital sum, which the land might be expected to realise if offered for the sale on such reasonable terms and conditions as a bona fide seller would require, assuming that the improvements do not exist at the time when the value is to be ascertained.

Consequently, where there is a house, building or other improvements on the land, these should not influence the value of the land for the purpose of property taxation.

The Commissioner of Land Valuations, appointed under the Revenue Administration Act, is authorised to conduct valuations. Under the LVA fresh valuations may be conducted by Order of the Minister but no alteration to the valuation of land is allowed until at least five years after the date of the last valuation (except in certain prescribed cases). The LVA also provides the opportunity for land owners to raise objections to the value imposed on their land and sets out the procedure for such objections.

A valuation roll is prepared for each district, which contains the following particulars in relation to each valuation:

a. name, nationality and postal address of the land owner;

b. situation, description and measurement or area of land;

c. unimproved value of the land; and

d. such additional particulars, including the improved value of the land, as may be prescribed.

Property taxes are credited to the relevant ‘district’ and are to be used to fund infrastructural services, garbage collection, the maintenance of parochial roads, street lighting and other civic improvements and amenities. The PTA makes it clear that “until paid, the said tax shall be a first charge and lien” upon the real property. The PTA goes further to state that if any property charged with property tax shall be in the possession of one or more persons, in order to enforce payment, the Collector of Taxes may proceed against any or all persons in possession of the property or seize their goods wherever those goods are found.

Therefore, it is crucial for example, that purchasers of property ensure that they receive evidence that all outstanding property taxes are paid up prior to completion of the sale. Tenants should also ensure that their lease/tenancy agreements contain provisions dealing with who is responsible for the payment of property taxes when they become due. Based on the nature and terms of certain leases, the parties may agree that the payment of property taxes is the responsibility of the tenant, for example, in instances where the tenant pays only a nominal consideration to the owner of the land for its use.

Payment of property taxes is also important in discouraging claims of adverse possession of land by squatters. Persons who have been in possession of privately owned land for a continuous period over 12 years can make an application to obtain title to that land by adverse possession. Evidence of the payment of property taxes by the person making a claim for adverse possession will strengthen his/her application and undermine the position of the rightful owner.

Alicia P Hussey is an Associate at Myers, Fletcher & Gordon and is a member of the firm’s Property Department. Alicia may be contacted via alicia.hussey@mfg.com.jm or www.myersfletcher.com. This article is for general information purposes only and does not constitute legal advice.