ALTHOUGH I have been highly critical of the amendments to Cyprus’ Immovable Property Tax (IPT) law for 2014, I have to admit that it does contain some good points.
However the law, in my opinion, will require the hiring of additional staff to deal with the many disputes, delays, complaints that are bound to arise leading to increased costs of collecting the tax.
This bureaucratic nightmare and additional cost could be easily avoided if the Land Registry were to have the Title Deeds to a property available for transfer on the delivery of a property to its purchaser. But their capacity to do this so far is a triumph of ambition over ability.
As readers will be aware, the Cyprus government originally proposed that IPT would be based on updated property values, rather than 1980 values. However, Parliament rejected the proposal as it shifted the burden of taxation onto the owners of medium value properties to the benefit of large owners such as property developers, who would pay less.
Eventually a last minute deal (a cross between a horse and a camel) was reached. Fifty three of the fifty four MPs voted that IPT would continue to be based on a property’s 1980 value.
The good points
It’s a face-saving change for Interior Minister Socratis Hasikos who told CyBC that “people will be asked to pay less than last year and the reason is very simple, many more properties have been included”, when referring to the original proposal as many people would have paid more tax.
People will pay less tax
- A rebate of 15 per cent will be available to those who pay their IPT by 31st October 2014.
- Home buyers who have yet to receive their Title Deeds will no longer have to pay their developer the IPT they have paid on their behalf (as usually stated in their Contract of Sale). This means that they will pay IPT at a much lower rate than the 1.9 percent paid by their developer – and they will also avoid the ‘enthusiastic charges’ imposed on them by the more nefarious developers.
- Property developers are required to provide the authorities details of properties they have sold and which have yet to be transferred to their purchasers:
(a) The distinctive features of the sold unit building,
(b) the name and address of the purchaser or transferee or beneficiary of the construction unit,
(c) the date of sale or assignment document
(d) the date of completion of the building,
(e) the date of delivery of possession of the building unit sold to the purchaser or transferee,
(f) the percentage of the total area of the building and the land attributable to the unsold.
This will enable the Land Registry to assess the 1980 value of the property in question and the Inland Revenue can then issue an IPT notice to the purchaser.
The law contains provisions that removes a developer’s obligation to report details of properties they’ve sold if the company is in liquidation or if the delay in issuing Title Deeds is the fault of the owner (the developer) although who is going to decide the developer is at fault and how they’re going to reach that decision is not specified and will potentially be the subject of many claims and counter-claims.
Immovable Property Tax rates
The tax rates remain unchanged from last year:
|
Assessed 1980 Property Value
|
Tax Rate
|
Tax
|
Cumulative Tax
|
|---|---|---|---|
| €1 to €12,500 | nil | €0 | €0 |
| €12,501 to ?€40,000 | 0.6% | €240† | €240† |
| €40,001 to €?120,000 | 0.8% | €640 | €880 |
| €?120,001 to €?170,000 | 0.9% | €450 | €1,330 |
| €170,001 to €?300,000 | 1.1% | €1,430 | €2,760 |
| €?300,001 to €?500,000 | 1.3% | €2,600 | €5,360 |
| €500,001 to €?800,000 | 1.5% | €4,500 | €9,860 |
| €800,001 to €?3,000,000 | 1.7% | €37,400 | €47,260 |
| More than ?€3,000,000 | 1.9% |
†Those owning property(ies) whose total 1980 value exceeds €12,500 will pay tax on their total 1980 value.
Recommendations
Unfortunately, we cannot choose the laws we wish to obey, and although I consider this law totally illogical, irrational and unfair, all should comply or be prepared to face the consequences.
For those without Title Deeds:
- Ensure your developer has your current address and contact details so that the Inland Revenue will send your IPT notice to the correct address.
- Do not pay 2014 Immovable Property Tax to your developer. Your developer is obliged to advise the authorities details of the property you purchased so that the Inland Revenue may send you an IPT notice directly – and I’m sure that no-one wants to pay IPT twice!
- If you believe the 1980 value of your property as assessed by the Land Registry is too high, you may challenge their valuation.
- If you believe that your IPT has been incorrectly calculated by the Inland Revenue, you may challenge their calculation.
Further reading
Cyprus Immovable Property Tax Law Amendments (2014) – note the first 8 pages contain the Greek text, the remaining 3 an approximate English translation.
@Nigel. Following the example you gave to Cathi Delaney, as my 1980 value is €46,500 I expect to be liable to pay IPT made up of €240 on the first €40,000 plus (0.8/100) x 6,500 on the balance of €6,500 = €52, giving a total IPT of 240 + 52 = €292. Please could you confirm that I have calculated correctly. Your article makes it seem that simple but…… ‘this is Cyprus!’
@Denton Mackrell on 2014/08/04 at 6:37 pm – That’s correct (assuming that the property is registered solely in your name).
Can I just check figures with you on table above for €40,001 to €120,000 – and €120,001 to €170,000 – why is €120,001 tax rate shown as €450 when €40,001 is shown as €640?
Thanks
@Cathi Delaney on 2014/07/30 at 4:30 pm – The tax rate the percentage shown in the second column.
If you subtract €40,000 from €120,000 and multiply by the tax rate (0.8%) you get €640.
So if you have a property with a 1980 value of €120,000 you would expect to pay €640 plus €240 – which gives €880 as shown in the right hand column (Cumulative Tax.)
Just went down to the tax office re IPT with our 4 forms filled in. (Our house has all 4 of us on the Title Deeds.) They would not even take the forms for reference, as each person’s share was under €12,500!
@David E on 2014/07/28 at 1:24 pm – Yes, IPT is calculated on the 1980 value of a property owned by the taxpayer. If the value is no more than €12,500, no IPT is payable.
As usual, very helpful thanks. Do you know what has happened to the intention that the IPT will be payable on-line? I have just followed the link from the Government web portal and had the following message “The Immovable Property Tax can no longer be paid through this web side. All payments are now made at the district collection offices of the Inland Revenue Department.” Assuming the online version never comes to anything (and we do have to complete forms again – contrary to your hope), will you publish the forms and translations as you did last year? Alternatively do you know if a bill will be automatically issued based on the information we supplied last year?
@Peter Rose on 2014/07/28 at 1:23 pm – I don’t have any further details at the moment, but as you’ve already given the information to the Inland Revenue, I doubt very much that they’ll need it again and they’ll issue you with an IPT notice automatically. (But I expect you may be asked if you’ve made any changes to the property.)
The JCC Smart will hopefully start accepting payments for 2014 when the tax notices have been issued.
And you should also be able to pay through one of the participating banks as last year.
Are they issuing Bills this year? We have have our Title Deeds and last year paid at the Tax Office but but understand that if you have a particular reference number you can pay at the bank. Is this true? Regards, David
@David on 2014/07/28 at 1:21 pm – I expect the payment system will be the same as last year (but I have no details at present). Last year you could pay at the Bank of Cyprus, Hellenic Bank, Alpha Bank Cyprus, Ethniki Bank (Cyprus), Piraeus Bank (Cyprus) Ltd, Emporiki Bank-Cyprus, USB Bank, Eurobank (Cyprus) or their co-operative bank once you had received the tax notice. And you expect you’ll be able to pay on-line via JCC Smart. (At the moment it says “The Immovable Property Tax can no longer be paid through this web side. All payments are now made at the district collection offices of the Inland Revenue Department.” but I expect this will change when the IPT notices are issued.)
Thanks Nigel. Appreciate your reply.
We’ve had our title deeds for 18 months or so, and the property is held in joint names, ie we each own half of it. We have two documents among the deeds showing each of our names, and showing we have a half share. Each document also shows a market value at 1980 of €23,500.
Can anyone tell me if this value is the total value of the property, or the value of our half share. Obviously this will decide whether or not we have anything to pay. We got no bill last year, and did not pay anything.
@Ray Atkinson on 2014/07/28 at 7:19 am – The Title Deed will show the full 1980 value of the property and it will also show your share (μεÃÂιδα).
You should not have anything to pay this year as each of your shares is €11,750, which is below the threshold of €12,500 at which IPT becomes payable.
Nigel. Do you know if we have to fill in the same forms as last year, or was that a once only requirement?
@Jim on 2014/07/27 at 7:10 pm – I don’t know if people will have to complete the forms again this year. Hopefully not as the Inland Revenue will have the information supplied last year.
If you have the Title Deed to the property you shouldn’t have to do anything.
So the IPT Saga drags on, clearly a shambles with, doubtless, the same old people doing, more or less, the same old thing – inefficiently of course and with more than the usual ‘eye’ to looking after their F & F (families and ‘friends’) in the process. But, I suppose, as always!, there are Winners, notably those with ‘older properties’, albeit much improved, still valued (1980) at less than €12,000.
My wife and I were in this category last year, and had our (discounted) €67.50 cheques returned in early January. Now we are told to ignore the new, higher – 15% – discount and pay Nothing at All. Yipee! Who, genuinely, likes paying taxes?
However: Cyprus charities benefit from this Government’s generosity to us, so we don’t feel bad about ‘paying nowt’. But:
What the H happened to the Revaluation?, too complex?, not enough info?, even more inefficient taxation and property functions? Could upset family and friends?, etc. Etc. Probably a mixture of all of these – and more!. Not to mention that 100,000+ (Well only 299,000 !!! seemingly) properties a Land Registry survey discovered that hadn’t previously been on the ‘radar’. Wow, an astronomical number of property owners not even paying IPT then?
Progress, even when Troika decreed, Is mind-blowingly slow in this country and clearly some benefit whilst many others don’t. Frankly we’d rather know – and pay – our taxes promptly, pay our fair-share within an overall equitable system.
Fat chance of that in the near or middle-distance future, it seems!
I note the article says do not pay the 2014 IPT to the developer, but what about the IPT for earlier years that the developer is now asking for?
@Phil Wood on 2014/07/27 at 12:42 pm – The law is effective from 1 January 2014; it is not retrospective.
How to go about refunding the developer for the Immovable Property Tax he has paid for the property you purchased in earlier years is described in the article Refunding developers’ Immovable Property Tax.
Nigel. When can you go to the tax office to pay your property tax?
Do you have to wait until your tax bill appears? Last year I never got a bill.
I am trying to avoid the queues of last year.
Thanks
@Jim on 2014/07/27 at 11:02 am – Some people tell me that they’ve already paid their IPT to the Inland Rvenue.
Thanks
But I am still slightly confused on this…..
As far as I am aware I have not paid any IPT since purchase to any one. I have never been asked or even had any letters/email or conversations from the Developer or any government department about this.
I remember a conversation with my lawyer at the time of purchase etc about the IPT. I distinctly remember being told I do not need to pay it until I have the Title deed. Of course like many of us I do NOT have the Title deed.
Q1/ Have I been a fool all along?
Q2/ Should I have paid some money to the developer?
Q3/ Should I have paid some money to the local authority?
Q4/ should I just leave sleeping dogs to lye?
Q5/ Do I contact some one and offer to pay something?
Q6/ If the Nice Developer has paid the IPT all these years on my behalf how do I get proof from them to say this has actually been done? And how do I know this proof is genuine?
I am and have been under the impression the developer/holder of the Title deed has to pay the IPT is this correct?
Like many of us on here I have just lost the interest to do to much there as No one there in Government (Cyprus) seems to have the willingness to do to much for any of us.
Hmm Interesting
@UBoat on 2014/07/27 at 10:23 am – You’ll need to check your contract of sale to see if it makes you liable for Immovable Property Tax from the time you took delivery of the property. If you are liable, you contact will contain a clause similar to the following:
“From the date of delivery of the Property to the Purchasers, the Purchasers shall be obliged to pay all taxes or rates corresponding to the Property in proportion to the whole project during the period prior to the registration of the Property in the name of the Purchasers.â€Â
Or perhaps
“The Purchasers shall, as from the date of delivery of the Property, pay all taxes and rates, in respect of the Property during the period prior to the registration of the Property in the name of the Purchasers.â€Â
(Virtually all the contracts I have seen make the purchaser liable for IPT from delivery).
If the developer does bill you at some stage, follow the advice in my article at Refunding developers’ Immovable Property Tax.