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Government tax hike will hit small home owners

Contrary to assurances given to the media by the Interior Minister Eleni Mavrou that small home owners would not be hit by increases in property taxes, government plans tell a different story.

ONE of the suggestions made by the troika was that it wanted to see the Cyprus government collect an additional revenue of at least €20 billion from property taxation.

Although the Interior Minister Eleni Mavrou has gone on record as saying that small-time property owners would not be hit by a rise in property tax, the government is proposing to lower the threshold at which Immovable Property Tax becomes payable from €120,000 to €40,000. The revised tax tales are as follows:

Properties with an assessed 1980 value up to €40,000 will be exempt.
From  €40,000 to €120,000 – the proposed rate is 0.3%
From €120 000 to €170,000 – the proposed rate is 0.4%
From €170,000 to €300,000 – the proposed rate is 0.9%
From €300,000 to €500,000 – the proposed rate is 1.0%
From €500,000 to €800,000 – the proposed rate is 1.1%
For properties valued above €800,00 – the proposed rate is 1.2%

The government is also proposing that residential properties with a total area exceeding 300 square metres will be taxed automatically.

If implemented, many small-time property owners will find themselves caught in this tax hike contradicting assurances given by Interior Minister Eleni Mavrou.

Readers' comments

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  • Odd_Job_Bob says:

    Jim,

    You and I are pretty much in agreement that the Cypriot government will never put into effect measures demanded by the Troika in exchange for cold hard cash. Where we differ is that you believe they won’t accept the conditions, thus not accept the dosh, and then have no option other than leave the Euro.

    I don’t know if you’ve read this article Leaving the Euro: What Would It Cost?, but in brief, a weak country leaving the Euro is simply NOT going to happen as they cannot afford it. Nor can they be kicked out.

    So, knowing this, the cheeky chappy artful Chairman Chris will pay lip service to meeting the austerity measures, take the money, then do nothing. Well, nobody (apart from the poor Irish) has gone anywhere near putting much of the austerity package in place, so why should Cyprus?

    This is the end result I fear. Austerity is really silly (as it NEVER works. I could cite so much stuff it would make “alleged” back-to-basics-homophobic-Creighton spin in her own nonsense), but with no possibility of an alternative in Cyprus (apart from obtaining a bridging loan until the gas and oil comes in), the post-first-EU-tranche-State will prostitute itself to the highest bidder, Russia. This bidder will massively destabilise the status quo (“We keep our SBAs, you keep your ongoing nonsense”).

    As anyone around in ’74 should know, if the SBAs are threatened, the good ole US of A WILL intervene (again), probably using its front line troops to do so while we the Brits will stand idly by looking forlorn and twiddling our collective thumbs. Again.

  • Jim says:

    Odd Job. The Cypriot government will not accept the terms the Troika will demand.

    The most likely escape for the government is to leave the Euro currency & return to a much devalued Cyprus pound. The government will claim it was forced into this situation by the Troika.

    Having no wish to see my savings devalued, I have removed them & will only keep enough for daily requirements in Cyprus.
    The future for people relying on earning a wage in Cyprus, does not look good. Probably not so bad if you have an external income.

  • Odd_Job_Bob says:

    Not really written much on the forum as unfortunately, the state of Cyprus is just continuing its inexorable march towards the conclusion that a few of us predicted a while ago.

    With regards to Ireland and the Troika, I cannot disagree with you more. I won’t comment on the Lucinda Creighton article as I don’t wish to swear on a Sunday morning, but firstly, I’m not the only one to believe that Troika-ordered devastating destruction currently tearing apart Irish society will turn its people into “Serfs of the Financial Markets”.

    Nor will it work.

    The Spanish, Greeks and Italians are all seeking to renegotiate the terms of their bailouts. Ireland are trying to as well as they know that they simply will never clear their debts, irrespective as to how much they make their people suffer. They thus want the European Stability Mechanism to take over bank debt, while at the same time Germany, Finland and the Netherlands are saying “No way, mateys, you ran them up, your government will have to pay for them”. But in German.

    The reason they are saying this is because ESM money equals their money. Throwing away hundreds of millions is not their thang, which is why, at some point, Germany has to pull the plug and leave the Euro. In the meantime, with recent bond auctions commanding negative yields (Schatz yields turn negative for first time, i.e. over a 7 year cycle, they are saving hundreds of billions in borrowing costs), they are in no rush to do anything and are quite happy to watch dumb European governments bleed their serfs dry.

    What has this to do with Cyprus?

    Irrespective as to how rubbish the present Cyprus government is, DO NOT go down the EU route like poor, trusting Ireland. They won’t anyway though, they’ll just take the money and run. When the funding stops (as that’s all the EU can do for non-compliance), it’s the alternative sources of funding that Cyprus will turn to which will cause the MAJOR problems.

  • @OJB – Welcome back, where have you been hiding.

    The next 12-18 months could be ‘interesting’ for Europe and we’ll have to see how things develop.

    Interestingly, few in the Republic of Ireland are whining, moaning or demonstrating. They are just getting on with it.

  • @All – I haven’t published the many questions posted on the subject of Immovable Property Tax.

    Immovable Property Tax (IPT) is an annual tax paid to the Inland Revenue based on the cumulative 1980 value of properties (as assessed by the Land Registry) registered in the name of an individual or company.

    At the present time, the threshold at which IPT becomes payable is €120,000 (so those whose total holding of property is below €120,000 are exempted from paying).

    For more information please read the articles filed under “Immovable Property Tax“.

  • Odd_Job_Bob says:

    Hi All!

    Did you miss me?

    As we all know, if you have more than one property in your name (as you’ve not handed over title deeds for a million reasons that we all know about), then the aggregate of property in your name is used for payment of IPT. The developer then divides up his bill between people whom he has defrauded (er, I mean, “not released the title deeds to”. There, that’s better).

    So, the small guys get hit and the big guys bypass the new taxes.

    Squeeze, breathe in, squeeze a bit more.

    There’s no need to worry about new Troika-led measures though for 3 reasons:

    1) The government has no desire nor ability to implement them

    2) The people simply won’t pay

    3) The Troika has no way of enforcing them and won’t kick a single soul out of the Euro anyway.

    What people should really be absolutely poo-scared of is what will happen when this failed, disobedient state cosy-up to Russia even more, for further bail-out money (I was spot on with the €20bn prediction, by the way!!!).

    Look at the totally predicted escalation of the conflict between Syria and Turkey (and Turkey’s heightened status as Boots on the Ground fixers in chief in the Middle East) and extrapolate that to Cyprus. Ouch…

  • paul lambert says:

    It sounds like state sponsored robbery to me and I don’t even live there ! Why would anyone think that its no problem. Get out and protest ! Anything the government does in Cyprus is not for the benefit of the people but of ther own pockets

  • @Pavlos – I have a relatively modest house (a bungalow) in Erimi on a 680 square metre plot.

    It’s 1980 value, according to the figure on my Title Deed, is €60,000.

    The house behind mine is on a similar sized plot and is larger than mine (it’s on two floors).

    My neighbour’s house is more than twice the size of mine (450 square metres) on a plot that is half the size of mine.

    The house opposite (also a bungalow) is about the same size as mine on plot size of over 1,000 square metres. Neither of the parents are working and their eldest son is currently supporting them and paying their mortgage.

    I don’t disagree with you that everyone should pay.

    What concerns me is Eleni Mavrou’s statements in the media that small-time property owners would not be hit by a rise in property tax.

  • Pavlos Loizou says:

    This article is extremely misleading.

    Just to put things in perspective, a 500sqm building plot in Makedonitisa (one of the most affluent areas of Nicosia) is valued at 14,000 euro in 1980 prices.

    Thus, in order to get into the first “tax band” you will need to have in your name more than (say) three such plots. If we assume that you are married, then you and your wife can own three plots each and end up paying no tax.

    Let us assume however that you are on the maximum of the first band, i.e. 120,000 euro. Thus, at a tax rate of 0.3% you would pay 360 euros per year.

    120,000 euro in 1980 prices equates to circa 8 building plots. At a value in today’s prices of (at least ) 250,000 each, i.e. 1.0m euro in total, paying 360 euro tax is peanuts.

    If anything, the tax bands should be lowered further in order for everyone to pay.

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