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Cyprus Immovable Property Tax 2014

Immovable Property TaxALTHOUGH 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) 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 €12,500nil€0€0
€12,501 to €€40,0000.6%€240€240
€40,001 to €€120,0000.8%€640€880
€€120,001 to €€170,0000.9%€450€1,330
€170,001 to €€300,0001.1%€1,430€2,760
€€300,001 to €€500,0001.3%€2,600€5,360
€500,001 to €€800,0001.5%€4,500€9,860
€800,001 to €€3,000,0001.7%€37,400€47,260
More than €€3,000,0001.9%

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:

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.