Latest Headlines

Property tax bill approved by parliament

A majority of Cypriot MPs have approved an amended bill to increase the rate of Immovable Property Tax, which is part of the preliminary agreement between Cyprus and its international lenders.

AFTER weeks of tense negotiations, a majority of MPs voted in favour of a provisional Immovable Property Tax (IPT) bill earlier this week at a special session of the Cyprus parliament.

By revising the Immovable Property Tax framework, it has been estimated that the government will collect approximately €136 million.

Under the provisions of the bill, which is needed for Cyprus to secure the much-needed first tranche of a €10 billion bailout at the start of May, all registered owners of property will be liable to pay a minimum of €75.

Government spokesman Christos Stylianides has acknowledged that the authorities lacked the time to gather sufficient information to prepare a comprehensive bill – and that further information will be collected in the weeks ahead to ensure that any distortions are removed by the time a fairer final proposal is put before parliament by the end of June.

Stylianides noted that there are areas in Limassol, Nicosia, and Larnaca where houses worth millions of euros have been built which do not have building permits. At the moment, these are registered as building plots or agricultural land.

The provisional bill also penalises registered owners of property who fail to pay their Immovable Property Tax by 30 September each year. Originally the penalty was set at 20% on the tax due – but was reduced to 10% with a 10% reduction if the tax owed is paid 30 days or more before the deadline.

As before, IPT is calculated on the Land Registry’s assessment of the value of a property at the 1st January 1980; the new tax bands are as follows:

Assessed 1980 Property Value
Annual Property Tax
Accumulated Tax (Max)
Number of Owners
Up to €€12,5000.60% (€75 min)€ €100155,822
€€12,400 to €€40,0000.60%€ €240115,215
€€40,000 to €€120,0000.80%€ €88065,611
€€120,000 to €€170,0000.90%€ €1,3306,619
€€170,000 to €€300,0001.10%€ €2,7605,211
€€300,000 to €€500,0001.30%€ €5,3601,982
€€500,000 to €€800,0001.50%€ €9,860848
€€800,000 to €€3,000,0001.70%€ €47,260910
More than €€3,000,0001.90%218

Further reading

Bill amending the law on Immovable Property Tax (Greek)

Readers' comments

Comments on this article are no longer being accepted.

  • @Neil – Immovable Property Tax is paid annually to the Inland Revenue Department and it is based on the assessed 1980 value of a property as shown on its Title Deed.

    It is not linked to the present day value of a property (although this will change in the near future as Cyprus implements the bailout conditions agreed with its international lenders).

  • Neil says:

    I am totally confused about all of this.
    Can someone explain this tax to me. Is it an annual tax or 1 off?
    Based upon a property value of 250,000 euros now, how much would I need to pay?

  • Steve says:

    @David Pole (and Nigel).

    it is possible that a property on which delivery was taken in 2006 has attracted IPT of €3000. It all depends on the original purchase price and the value of the developer’s total portfolio for which title deeds have not been transferred. I calculated my outstanding IPT last year and had it confirmed by the developer, as well as having a written undertaking from them that I will receive all necessary documentation, basically statements and a receipt, that will allow me to reclaim (in theory) all the taxes that have been paid until transfer of title, whenever that may be. For all owners, reclaiming IPT will become more complicated from now on under the new tax bands because they will all be liable to pay some tax that will not be refunded.

    This is how it is done. If the developer has property assets worth tens or hundreds of millions, as is the case with most of them, you can forget about all the lower bands and the nil rate of IPT . The developer will have effectively paid the top rate every year on your property and that is what he will require from you, from the date you took delivery, if you want title deeds or the cancellation of your contract for any reason, including selling. Here are some rough numbers.

    1980 value of property delivered in 2006 = approx 35% of purchase price.
    Convert to Euros by X 1.708585
    use maximum IPT rate 2006-2013 of 0.4% per annum on the whole 1980 value.

    For a cumulative IPT of €3000, I guesstimate you would have paid originally around CYP £1.05 million for the property. If you paid less, then check with the accounts dept of the the developer and ask for the specific calculation for your property. No VAT is payable and most contracts do not require interest on these payments (you did read your purchase contract, didn’t you?). From now on, most people without title deeds will be building up IPT debts to the developer, per annum, around 475% greater than before, so if €3000 for seven years is correct so far, welcome to over €2000 per annum for the future.

    This is part of the leaving present that comrade Christofias gave to all of us, when he destroyed the financial well-being of Cyprus and then refused the prospect of far better deals offered by the EU than we are being forced to accept now.

  • @David Pole – There is no question in my mind that you are being ripped off. There is no way the developer could have paid €3,000 Immovable Property Tax on your behalf – perhaps it’s a mistype, but from past experience I doubt it.

    I expect that your contract of sale makes you liable to pay IPT and other property-related taxes from the time you took delivery – this is quite normal.

    The Cyprus Property Action Group published an article some time ago on how to deal with this situation, you can find it at Immovable property tax & fraudulent practices

    And there’s a page on my ‘static’ site that gives a brief summary at Cyprus Immovable Property Tax law – and there’s a letter from the Interior Ministry outlining the information the developer is required to supply you with that may prove helpful.

    You could try reasoning with the developer – but if that fails you could sue him. But the problem doing that is that it will cost you more in legal fees & court costs (although theses could be recovered if the court awarded judgement in your favour).

  • David Pole says:

    Hi Nigel,

    Our well known developer are claiming 3000 euros from us to cover immovable property tax they claim to have paid on our property, to which we do not yet have the title deeds.

    We are selling the property, and this bill covers 2006 to 2012. Does this back dating to when the property was registered apply to everyone when assessing their immovable property tax bill? Your article shows figures that indicate a maximum charge. Is this what we should be paying, which in our case would be 880 euros. The value of our property according to our developer, gives a 1980 value of 36% of the contract price in 2006. Does this seem a fair assessment?

    Thanks for your help, and keep up the good work.

    David

  • @steve – the revised rates apply to Immovable Property Tax, which is paid to the Inland Revenue.

    This has nothing whatsoever to do with local Municipal and Community taxes, which remain unchanged.

    Please see my earlier comment of May 4, 2013 at 6:54 pm, which outlines how Immovable Property Tax is currently collected.

    I expect the government will make changes to the way the tax is collected as there will be more than 300,000 ‘new’ tax payers, many of whom will know of the change.

    Communicating the new regime to non-resident property owners is going to be an issue that will have to be addressed – as these will not have registered with the Inland Revenue.

    We await developments – it’s going to take some time to sort out the logistics.

  • steve says:

    Nigel, thank you very much for your regular publications.

    Now, unsure how and where to pay the tax?

    Cash as the annual tax direct payable to the municipality (in a lump sum) or direct debit?

    Is the previous/current annual amount (municipality tax) included in the new mentioned rates or are they different?

    If only cash, how to pay for non residents who are not present at the end of September?

    More clearly instructions issued by the goverment (also in english) would be helpful.

  • andyp says:

    Best of luck Mr President trying to extract the hike in IPT from developers. You do not even collect what they are due to pay now.

    I would be happy to pay my share, probably along with thousands of others, but I have just remembered that despite buying my house in 2005 I am still not the registered owner. Damn. You best reduce that income forecast from this tax increase.

    Maybe next year but probably not.

    Nail on the head UBoat. Council tax similar to IPT except we already pay for bin collection so just another tax, for those that pay, for absolutely nothing.

  • @Pippa – Developers should submit IPT returns annually to the Inland Revenue Department. Unfortunately some do not and wait until Title Deeds for the individual properties have been issued by the Land Registry.

    This results in them having to pay penalties to the Inland Revenue for late payment – and the more nefarious developers then expect those who have bought properties to pay these penalties.

  • Pippa says:

    I assume that developers will be liable to declare all the properties they have the title deeds for? If so this is open to so much abuse. I would be happy to pay for my house but I still do not have title deeds. I only hope that this new bill will encourage all developers to at least start to off load title deeds to those of us who have paid for their properties in full.

  • @Denton – You’ll find the relevant forms at Applications/Forms regarding immovable property.

    I believe the forms that are required are Ε.Πρ.301 (2007) and Ε.Πρ.302 (2007). These are only available in Greek – cash & cheque payments are accepted.

    Hopefully the process will be simplified – and how on earth they are going to advise non-residents they are liable for this tax?

    We await developments.

  • Denton Mackrell says:

    @Nigel. I have heard that each person liable to pay IPT must self-declare their property and pay the appropriate IPT by 30 Sept without any notification or reminder sent by the state. If this is correct, please could you enlighten us as to where the declaration form can be obtained and whether there is an English version, to whom/where the IPT must be paid and what forms of payment are acceptable.

  • UBoat says:

    Great looks like we better start saving even more.

    I assume this means we will have to pay the allotted amount by this 30th sept 2013?

    I wonder how many will actually pay up when due and who will chase them and in what order ?

    I really don’t understand why this has not been done years ago? (not that I wanted it) but it seems just like our council TAX in UK…..

    Already I pay water (OK), Electric (OK), something to local council for what ? I don’t know as we don’t have a finished development, and we have to pay collectively (privately) for our sewage pit to be emptied regularly? Not (OK) as we are NOT connected to main sewage and probably never will be despite all the promises.

    Bins get emptied regularly (good)

    Our sewage /waste pipes and drains on the development are not good and not fit for purpose, council wont help as they say its the developer and they wont do anything …..

    NO street lighting on our development (Not OK) and here we have yet another expense at a whim for what gain?
    so the officials can squander that as well? and not deal with thousands of title deeds not issued (some may never be) and developers who just do as they please despite local officials promising to sort them out.
    So what are we paying for now?

    Sorry about the rant but I feel a little better now.

    UBoat

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

  • Text size

SELECTED REPORTS

Back to top