FOLLOWING our report earlier this month concerning a possible increase in Immovable Property Tax, the Cyprus government submitted a bill to parliament earlier today designed to raise an additional €29 million/annum in much needed state revenues.
According to the report that accompanied the bill, the island-wide revaluation of property will take three years and the interim solution proposed by the bill is to increase the tax rates based on the assessed 1980 value of property.
The proposed revised tax rates are as follows:
Assessed 1980 Property Value
Proposed Tax Rate
|Up to €40,000||nil|
|From €40,000 to €120,000||0.30%|
|From €120,000 to €170,000||0.40%|
|From €170,000 to €300,000||0.90%|
|From €300,000 to €500,000||1.00%|
|From €500,000 to €800,000||1.10%|
|More than €800,000||1.20%|
The hike in Immovable Property Tax was included in the package of measures that the government submitted to the troika last week.
It is estimated that the lowering of the threshold from the present €120,000 to €40,000 will affect many property owners who were previously exempt.
According to the bill, the economic impact will be small for the vast majority of taxpayers.
However, for the owners of multiple properties, such as property developers with large numbers of unsold properties on their books, the tax increase will amount to thousands.
According to the Ministry of Finance there are about 3,500 people with property valued at over €300,000 and about 1,000 with property valued at €800,000 or more.
Charges to Immovable Property Tax were last implemented in January this year, when the tax-free threshold was reduced from €170,000 to €120,000 and tax rates were increased.
The government said that this tax is only the beginning. “Due to the immediate need to strengthen government revenue, it is necessary and urgent to adopt a scenario that will enable the increase in government revenue from taxation of property”, it said.
A well-known local authority on property matters suspects that 50% of private buildings/houses have not been registered on the Title Deed by their owners. As a consequence many of these owners will manage to avoid paying these increased taxes.