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Race to revalue half a million properties

The race is on to complete the revaluation of some 500,000 properties island-wide by the end of June 2014 to meet one of the bailout conditions agreed with Cyprus’ international lenders last month.

EMPLOYEES at the land registry are putting in extra hours without pay to reassess property values as part of the island bailout deal.

Cyprus has until now taxed properties according to their 1980s values and many properties have not even been registered, making it difficult for authorities to come up with a fair Immovable Property Tax.

Deputy land registry director Kleanthis Kleanthous said civil servants were busy pulling 12-hour shifts – with no overtime – to revalue some 500,000 properties island-wide.

The reassessment must be completed by June 2014.

International lenders have also demanded that in the next 20 months the department must issue overdue titles for 60,000 units.

Until now, the department issued 1,000 title deeds per month – it would have to increase its performance to 3,000 to complete the task.

“Civil servants are conscious of the problems and do whatever they can to help,” Kleanthous said.

He added that a number of his colleagues had voiced their readiness to work without overtime pay, even on Saturdays, to help get the job done in time.

“Seeing the huge need, a lot of colleagues from all districts, have volunteered to work for at least one Saturday,” Kleanthous said.

The department must also evaluate all state property, including that belonging to semi-state organisations and municipalities.

“We will all take to the streets or work in the office, to give the message that we know what is going on and we do not want additional taxes on Cypriot society,” Kleanthous said.

Kleanthous urged the public to show understanding since the department’s other duties will inevitably be carried out at a slower pace.

In April, the government was forced to submit provisional Immovable Property Tax legislation (IPT) in a bid to meet immediate bailout conditions, but pledged to have it amended by the end of June to make it fairer.

Authorities lacked sufficient data to prepare a comprehensive proposal but at the same time the bill had to be approved for Cyprus to be eligible for the much-needed first tranche of a €10 billion bailout it received this month.

“There are whole areas in Limassol, Nicosia, and Larnaca, where houses worth millions of euros are built, which do not have a building permit at the moment and are considered plots and fields,” government spokesman Christos Stylianides said at the time.

Race to revalue half a million properties

Readers' comments

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  • Denton Mackrell says:

    @Nigel. I agree. In discussion with accountants, it seems that their profession is seeking a rationalisation and streamlining of the tax returns system that would incorporate all forms of personal taxation in a single on-line folder and something similar for corporate taxes. Will it happen any time soon? Hmmm.

  • @Denton Mackrell – I as talking with a (retired) lawyer a couple of weeks ago on this subject.

    It seems that people tend to pay this tax when (a) a property changes hands or (b) when someone dies and the property is transferred to the beneficiaries.

    The Inland Revenue needs to change the system whereby it sends out tax demands annually. They already do this for income tax, so why not for Immovable Property Tax?

  • Denton Mackrell says:

    Regardless of whether the valuations are fair, two glaring problems are:

    1. Many, perhaps the majority, of Cypriot-owned properties with title deeds have been registered on the land and do not include any buildings erected subsequently. This is where the major IPT shortfall will be if based on current title deed records.

    2. The IPT payments rely on self-declaration by the property owner. As 1 above suggests, few have done so thus far. Further, while there are penalties mentioned for non-declaration or late or non-payment, Cypriot accountants have told me that they do not expect many Cypriots to play ball with the new IPT scheme. They never have before so why would they now, the argument goes.

    Of course, if the authorities fail to pursue the tax liabilities vigorously, it will ensure an IPT failure. Instead of an expected Euros 80m in IPT revenue flowing in this year, the Troika will be lucky to see 8m. This, in turn, will make life much more difficult with the Troika and securing tranche 2 of the bailout. But then, of course, so will many other non-compliances such as failing to drastically cut the public servant and State Owned Companies’ headcount, and the wholesale transfer of the bankrupt Laiki Bank staff to BoC when the latter has to cut its own headcount by 40%!!

  • Whirlybird says:

    “They better not re-value my 1990-purchased, terraced cottage until I’ve received my Title and paid Transfer tax on the purchase value………..NOT their super-inflated 2013 value!”

    You have a point here Dee Vickery, if you don’t have a starting point to work from i.e. . 1980 values how do we know that we are not being robbed again to extricate more cash from us. I’ll bet that the local Cypriot population do not lose out with “mistakes” or the massive homes that the families of genuine refugees are building on top of their “free” building plots with their building grants after which they are free to sell after two years of living in them at no penalty. Please correct me if I am wrong.

    Regards.

  • Objective says:

    This is a good start to having an organized, fair and equitable tax system. Issuing titles on closing much like other western countries and re evaluation every 4 years to reflect fmv on which to apply a percentage rate in order to arrive at a rate of tax.

    In most western countries re evaluation is outsourced to the private sector. I think that the Cypriot government bureaucracy needs to become leaner and let the private sector do a proper job. Next will be enforcement of property taxes and collection of taxes.

  • Troy says:

    Surely only a surveyor can value a house not a load of Cypriot civil servants it will be like the council tax banding in UK this has recently been challenged successfully surely the IPT Valuations do not take into account that property value is the 25 year rental and maybe a bit extra for first line locations.

  • steve says:

    The intention may be all well and good but what happens when the Cypriots do what they are good at, delaying tactics. Is there anything in place when people appeal against the valuation. This is going to be another title deeds scenario.

  • Dee Vickery says:

    They better not re-value my 1990-purchased, terraced cottage until I’ve received my Title and paid Transfer tax on the purchase value………..NOT their super-inflated 2013 value!

  • Stuart says:

    A pity Kleanthis didn’t see fit to klean this problem up years ago.

  • Costas Apacket says:

    Thanks Nigel, err I think!

  • Peter Davis says:

    Any idea how I find out what my Greek neighbour 3 bed house is valued at? It must be less than mine.

    I know the 1980 price of my 3 bed villa is more than I paid for a 3 bed house on the outskirts of London in 1981. Which is unbelievable.

    There is no way my villa in a small village is worth more than a London house, but I don’t see an appeals system?

    How do they arrive at the price does anyone know?

  • @Costas Apacket – I have been advised that there are insufficient numbers of trained staff to value unregistered properties by June AND revalue all 500,000 properties by June 2014.

    So efforts are being focussed on the revaluation of all properties, which will include those which are currently unregistered.

  • Costas Apacket says:

    So when the Government says it is going to amend the provisional Immovable Property Tax legislation by ‘the end of June’ to make it fairer, which end of which June are they talking about, 2013 or 2014?

    And if they mean the end of June 2013, how will they be able to achieve this if the revaluations will not be completed until the end of June 2014?

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