What are all the property taxes and fees in Addis Ababa?

Authored by the expert who managed and guided the team behind the Ethiopia Property Pack

Yes, the analysis of Addis Ababa's property market is included in our pack

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THE AFRICANVESTOR

A team specialized in real estate investing in African countries

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in Addis Ababa. If you'd like to learn more about us, you can check our presentation page.

How this content was created 🔎📝

At The AfricanVestor, we explore the Ethiopian real estate market every day. Our team doesn't just analyze data from a distance—we're actively engaging with local realtors, investors, and property managers in cities like Addis Ababa, Dire Dawa, and Mekelle. This hands-on approach allows us to gain a deep understanding of the market from the inside out.

These observations are originally based on what we've learned through these conversations and our observations. But it was not enough. To back them up, we also needed to rely on trusted resources

We prioritize accuracy and authority. Trends lacking solid data or expert validation were excluded.

Trustworthiness is central to our work. Every source and citation is clearly listed, ensuring transparency. A writing AI-powered tool was used solely to refine readability and engagement.

To make the information accessible, our team designed custom infographics that clarify key points. We hope you will like them! All illustrations and media were created in-house and added manually.

What scenarios and property types are we pricing for taxes and fees?

Property taxes and fees in Addis Ababa vary significantly depending on your specific scenario and property characteristics.

For buying scenarios, you'll face transfer taxes, stamp duties, and registration fees that differ based on whether you're purchasing residential (4% transfer tax) or commercial properties (19% transfer tax).

Selling involves capital gains tax at 15% of your net profit, calculated on the difference between sale price and your original purchase price plus improvements.

Holding property requires annual property taxes ranging from 1% to 4.5% for houses and 0.2% to 1% for land, calculated based on standardized lease values per square meter that vary by location, building materials, and property standards.

Renting out property subjects you to rental income tax at progressive rates from 10% to 35%, while building new construction involves VAT at 15% plus various permit and inspection fees.

What are the exact annual property tax rates and calculation methods?

Annual property tax in Addis Ababa operates on a progressive rate system based on estimated annual lease values derived from standardized monthly rates per square meter.

The tax rates range from 1% to 4.5% for residential houses and 0.2% to 1% for land properties, with minimum thresholds starting at 600 ETB per year for the lowest brackets.

The calculation formula for buildings is: Tax = Property size (m²) × (monthly lease rate × 12) × applicable tax rate percentage.

For land properties, the taxable base is set at 25% of the market value, which is then subject to the lower tax rates of 0.2% to 1%.

The standardized monthly lease rates vary significantly by location within Addis Ababa, building materials used (concrete, stone, wood), and property standards (luxury, standard, basic).

How frequently are tax rates updated and what increases should you budget?

Property tax rates and lease estimates in Addis Ababa are updated through discretionary government studies rather than automatic indexation formulas.

The most recent major adjustment occurred in 2025, representing the first significant update after decades of static values, with standardized rates increasing by 25-34% in many categories.

There is no formal inflation index tied to property tax adjustments, making future changes unpredictable and dependent on government policy decisions.

For budgeting purposes, property owners should anticipate annual increases of 1-3% in the absence of major proclamations, though actual changes can be much higher when formal updates occur.

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What municipal service charges apply and how are they calculated?

Municipal service charges in Addis Ababa cover water, waste management, sanitation, and general city services, typically assessed as flat fees or per-unit charges rather than per square meter calculations.

Service Type	Calculation Method	Estimated Monthly Cost (ETB)
Water Supply	Per unit consumption	200-500
Waste Collection	Flat rate per property	100-300
Sanitation Services	Flat rate per property	50-150
General Municipal	Flat rate per property	100-250
Total Typical Range	Combined services	450-1,200

What one-time charges apply when buying property?

Property purchases in Addis Ababa involve several mandatory one-time government charges that buyers must factor into their total acquisition costs.

Transfer tax represents the largest single charge at 4% of property value for residential properties and 19% for commercial properties, paid entirely by the buyer.

Stamp duty adds another 2% of the property value, traditionally split equally between buyer and seller, though actual arrangements can vary based on negotiation.

Title registration fees are fixed at approximately 10,000 ETB regardless of property value, covering the official transfer of ownership documents.

Additional professional fees for notary services, legal representation, surveys, and title searches typically total around 0.5% of the property value, shared between both parties depending on the purchase agreement.

How is capital gains tax calculated when selling property?

Capital gains tax in Addis Ababa applies at a flat rate of 15% on the net gain from property sales, with specific calculation methods that can significantly impact your tax liability.

Net gain calculation starts with your sale price minus the original purchase price, then subtracts allowable improvements and transaction expenses incurred during ownership.

Allowable deductions include documented renovation costs, major repairs that add value, legal fees from the original purchase, and selling expenses like agent commissions and legal costs.

For example, if you sell a property for 3,000,000 ETB that you originally bought for 2,000,000 ETB and spent 200,000 ETB on improvements, your taxable gain would be 800,000 ETB, resulting in 120,000 ETB capital gains tax.

Ethiopia's tax system does not currently provide inflation indexation for capital gains calculations, meaning the full nominal gain is subject to tax regardless of how long you held the property.

What rental income tax rates apply to property owners?

Rental income from Addis Ababa properties is subject to Ethiopia's progressive personal income tax rates, ranging from 10% to 35% depending on your total annual income.

Property owners can deduct up to 30% of gross rental income for allowable expenses including maintenance, repairs, property management, and depreciation before calculating taxable income.

For example, with monthly rent of 10,000 ETB generating 120,000 ETB annual gross income, after applying the 30% expense deduction, your taxable rental income would be 84,000 ETB.

The progressive tax structure means the first 7,200 ETB of annual income is tax-free, with subsequent brackets taxed at 10%, 15%, 20%, 25%, 30%, and 35% for the highest earners.

Withholding tax requirements may apply when tenants are companies or organizations, requiring landlords to remit taxes directly rather than filing annual returns.

Does VAT apply to property transactions and construction?

Value Added Tax (VAT) at 15% applies to new property sales by developers and all construction services in Addis Ababa, significantly impacting purchase costs for new developments.

New property purchases from developers include VAT in the total price, so a property listed at 1,000,000 ETB would actually cost 1,150,000 ETB including the 150,000 ETB VAT component.

Construction services including building, renovation, and major repairs are subject to VAT, which contractors must collect and remit to the tax authority.

Resale transactions between individuals are generally exempt from VAT, as are basic residential rental arrangements, making second-hand property purchases more cost-effective than new developments.

Commercial property transactions and luxury residential rentals may be subject to VAT depending on the seller's registration status and transaction structure.

We did some research and made this infographic to help you quickly compare rental yields of the major cities in Ethiopia versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.

What are the standard professional service fees for property transactions?

Professional service fees for property transactions in Addis Ababa typically total 0.5-1% of the property value, covering essential legal, administrative, and technical services required for secure ownership transfer.

1. **Notary services** for document authentication and witness services, typically 0.1-0.2% of property value2. **Legal representation** for contract review, due diligence, and transaction management, usually 0.2-0.3% of property value3. **Property survey** for boundary verification and measurement confirmation, often fixed fees of 15,000-25,000 ETB4. **Title search services** to verify ownership history and identify any encumbrances, typically 5,000-10,000 ETB per search5. **Translation services** for foreign buyers requiring document translation, ranging from 3,000-8,000 ETB depending on document volume

These fees are generally negotiable and can be allocated between buyer and seller according to the purchase agreement terms.

What building permit and inspection fees should you expect?

Building permits and related approvals in Addis Ababa involve multiple municipal fees that vary based on project scope, location, and building classification.

Basic building permits for residential renovations typically range from 5,000 to 20,000 ETB, depending on the project's complexity and the property's location within the city.

New construction projects face higher fees based on floor area, building height, and intended use, with commercial developments generally paying 50-100% more than residential projects.

The permit approval process typically takes 4-8 weeks from initial submission, provided all required documents are complete and meet zoning requirements.

Inspection fees are usually included in the initial permit cost, covering foundation, structural, electrical, and final occupancy inspections required before certificate issuance.

What are the payment deadlines and penalty structures?

Property tax payments in Addis Ababa are typically due annually, with specific deadlines set by the city administration that property owners must strictly observe to avoid penalties.

Late payment penalties begin accruing 30-60 days after the original due date, starting at 1-2% monthly interest on the outstanding amount plus additional fixed surcharges.

For example, a 10,000 ETB property tax payment made 45 days late would incur approximately 200 ETB in penalties plus monthly interest charges until full payment is received.

Transaction-related fees like transfer taxes and stamp duties are due immediately upon property transfer, with delays potentially preventing the completion of ownership transfer.

Municipal authorities strictly enforce permit payment deadlines, with unpaid fees leading to construction stops, legal consequences, and potential project delays that can significantly increase overall costs.

What exemptions and discounts are available for property buyers?

Several exemption and discount programs exist in Addis Ababa for qualifying property buyers, though eligibility requirements are specific and documentation must be comprehensive.

First-time homebuyers may access reduced transfer tax rates or stamp duty discounts, though specific income thresholds and property value limits apply to these programs.

Senior citizens and disabled individuals can qualify for property tax reductions upon providing medical documentation and proof of income below specified thresholds set by city administration.

Housing cooperatives registered with the government may access significant land lease fee reductions and expedited permit processing, provided they maintain compliance with cooperative housing regulations.

Required documentation typically includes national ID, income certificates from employers or tax authorities, medical certificates for disability claims, and for cooperatives, formal registration documents and member lists.

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Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.

It's something we develop in our Ethiopia property pack.

Sources

1. Dabelo Law Firm - Property Tax Legal Update
2. Addis Insight - Property Tax Calculation Guide
3. Dabelo Law Firm - Revised Transaction Tax Prices
4. Gulele Sub-City Building Permit Authority
5. The African Investor - Foreign Ownership Guide
6. The African Investor - Moving to Ethiopia Property Guide
7. Addis Tax Initiative - 2025 Assembly Brochure
8. Addis Insight - Landmark Property Tax Law