Latest Headlines

Property tax legislation has utmost priority

A bill on Immovable Property Tax, a prerequisite for the payment of the first instalment of the Cyprus bailout, is being drafted and will be placed before parliament as soon as possible.

CYPRUS Interior Minister Socratis Hasikos has said that a bill is swiftly being prepared to increase the amount of Immovable Property Tax being collected as required by the bailout terms agreed with the troika.

The government currently collects around €29 million in Immovable Property Tax and the first instalment of the bailout is conditional on a bill being passed that will increase that amount by at least €75 million.

Immovable Property Tax is based on the value of a property at 1st January 1980 and the Memorandum of Understanding calls for the extra tax to be raised by:

  • Adjusting 1980 values by the Consumer Price Index 1980 – 2012 and/or
  • Amending tax rates and/or
  • Amending value bands.

Last month the government scrapped a bill on Immovable Property Tax put forward by the Christofias administration, which aimed to raise €180 million. Hoteliers protested saying that the bill would have increased the amount of tax a hotel would have to pay by 900 per cent. Landowners and property developers also protested saying that the changes would drive the economy deeper into recession.

The new bill will be placed before a plenary session of the House as soon as possible.

Readers' comments

Comments on this article are no longer being accepted.

  • edna says:

    Hope this does not sound silly but with the drop in property value would that not mean a lower rate of property tax?
    Also with the drop in sales surely the DLOs have more time to issue title deeds? Developers with less work also should be able to find time to sort out their responsibilities regarding certificates of final approval etc and help speed up the process?

  • Yvette says:

    Wonder of wonders, just got a call from the Land Registry, after two years of waiting they have finally added my house onto my land deeds, how convenient…… They must be processing all the backlog this week then! Await your call too in the next few days and then await your IPT invoice! Must’ve stopped filing their nails and are doing some work.

  • aggisdemetri says:

    Nigel Howorth

    what’s stopping us from all of us to sue the government re title fiasco?

    I’m sure this is the only option left?

    Why believe title is coming? mate death will meet us quicker than the title for most.

    why don’t all members to your site chuck in 1000 euros to some smart Jewish American solicitor who can really wipe the floor with all governments of cyprus, why are we all wasting time and hoping the troikans will kick ass or sum dumb uk mp who may be out voted in the next elections change anything in Cyprus, Cyprus is meaning less, its a drop in the ocean, I can see bank of Cyprus going under within a year, and I’m sure within 5 years little kyproulla will be kicked out of the EU.

  • @jon – you need to check your contract of sale. I will probably say that you are responsible for paying all local taxes from the date you take delivery.

    The Inland Revenue can’t demand tax from you until title to the property is registered in your name – and until that time, the developer pays (as the property is registered in his name) and will then ask you for a contribution.

    Believe it or not there are some developers who charge their clients correctly – and help them recovery any overpayments from the Inland Revenue once title to the property is registered in their name. And there are some developers that do not expect their clients to pay.

    The problem is the nefarious developers who fail to submit their IPT returns as required by the Inland Revenue Department. The Revenue penalises them for non or late payment and these developers add these charges to their customers’ bill. Some base their charges on the price paid for the property (which is totally incorrect) and elicit payment by withholding Title Deeds.

    But the system is so complex that the Inland Revenue has been known to make mistakes.

    Hopefully when the troika has finished cleaning up the island’s banking system, it will send some specialists over to sort out the unholy mess in the Land Registry systems.

    We live in hope.

  • jon frazer says:

    @Nigel 3.45
    Whilst I agree that one is morally responsible for paying taxes on a property when taking delivery of it, I would not pay anybody except the Inland Revenue, and then only on the same uniform legal basis as all other citizens. I would not acceed to arbitrary or concocted demands from individuals for tax which they are liable for (until title is transfered), by virtue of the government’s incompetence.

  • @jon frazer – I would argue that you are morally responsible for paying taxes on your property when you take delivery of a property.

    The reason there are so many issues with Immovable Property Tax is because the Government is unable (or unwilling) to issue Title Deeds when a property is delivered.

    If anyone should be sued for this fiasco, it’s the government.

  • jon frazer says:

    Nigel- re. your post 11.47 am.

    The document you refer us to goes on to say that there is an “administrative appeals process for all taxes before going to court”.

    If someone had declined to pay their developer’s IPT bill (in relation to a property they had paid for), could they not appeal their case on the grounds that their lawyer had not acted in their interests when drawing up the contract (by making the purchaser liable for the developer’s taxes)?

  • @tony cassidy – non-payment of tax is to become a criminal offence.

    Check out page 20 of the Memorandum of Understanding on Specific Economic Policy Conditionality.

  • tony cassidy, says:

    How accommodating will developers be?

    In the current economic depression what will happen to people who cannot afford to pay the fees applicable to obtaining deeds?

  • @steve – the developer remains the registered owner of the property until its Title Deeds have been issued and its ownership has been conveyanced to the buyer.

    And it is the registered owner who is responsible for submitting annual IPT returns and paying the tax demanded by the Inland Revenue Department.

    But most contracts of sale that I have seen make the purchaser liable for all taxes at the time of delivery.

    Some developers submit IPT returns infrequently and pay late – and the Inland Revenue penalises them. These developers then try to reclaim the penalty payments from their customers.

  • andyp says:

    Pippa/Steve – My understanding is that IPT is paid by the developer on completed properties until such times as the title is transferred to the rightful owner. Depending on the wording of your contract the developer in many cases will charge you for the IPT they have paid over the years before agreeing to transfer title.

    Big problem to come is who will actually get their deeds if the developer has an outstanding loan against the property in question. The Bank will in my opinion be looking for payment even though they are at fault for allowing NPL’s to rocket. Court actions to follow I suspect.

  • Pippa says:

    I think there are many of us who would be very willing to pay the IPT if we could get our hands on our title deeds. I just hope that the new tax bill hastens the issue of title deeds to those of us who have paid in full years ago for our property.

  • steve says:

    I am confused. If the title deeds have not been issued then your property still belongs to the developer not you. Does the developer then become liable for the IPT or is it because the title deeds have not issued no IPT is payable. If it is the latter then it would make sense to issue the deeds ASAP.

    I have also heard that in some cases the developer will not release the deeds until the purchaser agrees to pay the taxes that have been accumulated during construction.

    All this is very confusing.

  • @Adrian – It makes no difference whether you are Cypriot or non-Cypriot.

    If you have the land registered in your name (i.e. you have the Title Deed) all you need to do is get the relevant permits and build a house. There is no obligation to have the house added to the deed.

    BUT some local authorities do inspect and advise the authorities and the house gets added.

  • Ivan says:

    If they force the banks to reduce their overcharging on mortgages it might be helpful. An increase in tax on property seems a good way to further fuel the downward spiral.

  • Adrian says:

    The whole Land Registry and Planning arrangements are a joke. If you are not Cypriot and bought a house here you are tracked all the way. If you are a Cypriot you can buy land get planning permission and move in on completion, you don’t have to register the house because you have the title to the land so you do not pay IPT on the house.

    Somebody in the local government should get a list of everyone that receives a bill for electricity or water and check against list for IPT. They probably would not have to increase the rate if everyone paid!!

  • Martyn's says:

    If TV and Paper talk this morning confirms my prediction here months ago, that the total bailout figure would be €20bn+, then this may be just the first of many Cyprus tax increases, we haven’t even reached the End of the Beginning yet as far as accurate identification of Cyprus’ financial and economic woes are concerned. Fasten your Safety harnesses, prepare your parachutes, the EU Finance Ministers meet in Dublin’s fair city this very weekend!

  • The views expressed in readers' comments are not necessarily shared by the Cyprus Property News.

  • Text size

Back to top