THE GOVERNMENT has almost finalised a new bill for the taxation of properties that will be put before a plenary session of the Cypriot parliament later this week.
According to Socrates Hassikos, the Cyprus Interior Minister, a fairer system of property taxation will be proposed for deputies to consider in which every registered owner will be required to pay.
Mr Hassikos suggested that the revised taxation will be based on the assessed 1980 value of properties, which will be achieved by amending the value bands.
Under the present legislation approximately 78,000 home owners are exempted from paying any property tax as the 1980 value of their properties falls below the €120,000 threshold at which this tax becomes payable.
The previous property tax proposal put forward by the AKEL adminstration, which aimed to raise €180 million and which reduced the tax free threshold to €40,000, was rejected when hoteliers, landowners and developers protested saying that the changes would drive the economy deeper into recession.
Under the bailout deal reached with the EU, Cyprus must ensure additional revenues from property taxation of at least €75 million – and the passing of a relevant bill is a prerequisite for receiving the first tranche of the bailout from the EU.
When a developer is made bankrupt before he transfers title then who pays the tax. Will a developer be forced to pay his taxes before he repays his loan. What value will they put on homes in any case. Most homes are worth much less on the open market than they were a few years ago and will be worth less the longer this goes on. Does having a contract lodged for specific performance make the buyer the registered owner for the purpose of taxation somehow. Don`t be surprised if they try it on and make the hapless buyers responsible even though many have no title.
I think the key phrase here is ‘every registered owner’, meaning that a large number of Cypriot properties built on Cypriot owned land and never registered with the authorities, will not pay any IPT or the associated property transfer taxes.
This means that the rest of us ‘registered owners’ will pay more than we would do if everyone was properly registered.