A BILL for the Immovable Property Tax to be levied in 2014 was agreed by the Cypriot parliament earlier today with 53 votes in favour and just one against.
Reports coming in say that the tax will be levied as last year (on 1980 property values).
The property tax will be paid by those who have gained possession of the property, regardless of whether the property is registered in their name (i.e. regardless of whether they have its Title Deed).
However there is a provision in the bill that exempts those who have not obtained the Title Deed through no fault of their own. Hopefully this provision will apply to those who are unable to obtain their Title Deeds because:
- They have not been produced.
- They cannot be transferred to the purchaser due to encumbrances (such as developer’s mortgages and other debts) that prevent their transfer.
- The buyer is unwilling to pay the extortionate fees that the more nefarious property developers tend to charge to release the deeds for transfer.
But it looks as if those whose Title Deeds are freely available but who have not paid the Property Transfer Fees will be required to pay the Immovable Property Tax.
The bill also moves the payment date from October to the end of November as this will give the taxpayer more time to find the money – and this move will also allow the Land Registry to find more new properties, which will help to increase the tax revenue collected.
In addition, while the existing law provides a 10% discount for those who pay within 30 days of the deadline, the new law provides a 15% discount for those paying 30 days before that.
@Nigel, firstly thanks for your website!! We were charged over 2000 Euros in taxes last year by the developer, which we paid even though we don’t have title deeds. Am I right in saying in 2013 we should not have paid these taxes? My property in 2006 was worth £72,000 Cypriot, the amount of taxes we paid to the developer seems a bit high. Can you shed some light on this based on your experience?
Regards,
Conrad
@Con on 2014/07/14 at 3:46 pm – I agree with you that the taxes you paid last year were extremely high. That would mean that your property’s 1980 value would be in the region of €105,000 if your property developer was paying at the highest rate of 1.9%.
Unfortunately the more unscrupulous developers have been extorting money from their customers claiming that it’s the Immovable Property Tax.
I wrote and published an article on how to deal with this issue at Refunding developers’ Immovable Property Tax.
Regrettably these ‘crooked’ property developers prey on the old and infirm – and others who may be unable or unwilling to stand up for their rights.
We ‘took possession’ of our concrete box in 2007 and our Developer is asking us to pay the IPT from this date.
Therefore who is going to reclaim the IPT back payments from the owners of the 299,000 unregistered properties given that many of them ‘took possession’ of their properties many years ago?
Presumably there will be water and electricity bills dating from the time each of these owners ‘took possession’ of the 299,000 properties?
According to the Cyprus MoU, the Troika was expecting the Cyprus Authorities to generate at least €75 million in 2014 by charging IPT at the newly updated valuation levels of between 6 and 36 times the old 1980 values, while at the same time reducing the applicable tax bands to compensate.
The Authorities seem to have avoided this by finding a workaround which uses the old 1980 valuations but now includes an additional 299,000 properties they had previously ‘overlooked’ or apparently been ‘unaware of’ while the owners have obviously enjoyed an IPT holiday.
The Troika will no doubt commend the Authorities for their inspired solution to the current chaotic state of IPT legislation, which also guarantees the Troika many more free trips to sunny Cyprus in future.
“Hopefully this provision will apply……” – I assume these are your words Nigel.
Does this mean that the “provision” is worded in terms that allow different interpretations?
I would have hoped that, if an owner’s lack of deeds is due to developer’s debts etc. there would be no question of them having to pay what is in effect the developer’s IPT.
@jjames on 2014/07/11 at 11:41 am – Yes they are my words. We’ll have to wait until the law is published to see exactly how the provision is to be implemented.
So if you don’t have to pay your IPT because you can’t get your title deeds, will it just be written off!
If you bought a house from someone that didn’t pay their CGT, the government won’t allow you to transfer the title deeds until they do, and now they say because of that you don’t have to pay the IPT.
I think they will be collecting less money all round if they follow their own rules.
So what would be the incentive for developers to hand over title deeds to purchasers and by doing so lose a valuable asset to be used as collateral when securing further loans?(after the purchasers have paid their IPT). Is it also not the case that around 299,000 properties have been ‘discovered / unearthed’. What kind of system permits this to happen unless those additional 299K are built in the countryside with no electricity, sewerage or water connected.
I may be a cynic but all this smells of further protection of crooked developers and unethical lenders – I do so hope I’m wrong.
Just wondering what “gained possession of the property” means, hopefully is does not include those of us who are renting, which has been suggested in the past?
@Graham on 2014/07/10 at 8:06 pm – gaining possession of a property is when a purchaser accepts delivery of a property from its vendor. It does not include those renting property.