THE INLAND Revenue Department (IRD) has no mechanism to implement a clause in the immovable property tax (IPT) law which aimed to address the question of who should pay tax on properties sold without title deeds because it is unable to apportion blame for non-issuance, daily Politis reported on Monday.
On July 10, the House voted an amendment to the IPT law that removed the tax obligation on sold properties from developers and placing it on buyers, with the deed of sale serving as sufficient proof of ownership transfer in the absence of title deeds. According to the law, the only evidence a developer needs is a list of properties sold as at the start of each year to the IRD, along with a deed of sale for each. Without these, the developer remains liable for any IPT payable.
A subsequent sub-clause in the legislation stipulated that the above do not apply where the legal owner – the developer – is deemed responsible for the non-issuance of title deeds, as in the case of properties sold while encumbered with a mortgage already taken out on it. According to this provision, such developers remain liable for any IPT due.
The problem, Politis said, is that neither the IRD, nor the Land Registry – responsible for issuing title deeds – has a blame-apportioning mechanism for delays in issuing title deeds. Additionally, the law does not specify criteria that determine who bears responsibility in this context.
It is understood that failure to implement this provision will result in thousands of cases brought before the courts as both the homeowners and the developers who sold the properties refusing to pay the tax.
The amending bill had been voted into law near-unanimously – the Greens’ Giorgos Perdikis being the sole dissenter – as a compromise, levying IPT on properties based on 1980 values after opposition parties rejected a government bill that applied a much lower tax levy on 2013 values.
As the old law had placed the tax burden on property owners – with title deeds as the sole criterion for determining ownership – protection to developers from undue IPT payable was deemed necessary by deputies when they were told by Land Registry officials that some 40,000 title deeds had been issued but not collected by buyers who could not afford the transfer fees.
Property developers are now faced with an August 25 deadline for the submission of an exemption application to the IRD, in which they must list all the properties they sold but technically still own.
Meanwhile, the IRD said that, while it is unable to assign responsibility for the non-issuance of title deeds, it will follow its original schedule of mailing IPT-due notices to property owners.
Graffiti scrawled on a wall of the gents toilet in the House of Representatives:
“is there any intelligent life in the House of Representatives?”
Someone scrawled the answer:
“yes, but I am only visiting!”