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
|€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.
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.
Cyprus Immovable Property Tax Law Amendments (2014) – note the first 8 pages contain the Greek text, the remaining 3 an approximate English translation.