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Title Deed fiasco haunts IPT collection

Neither the Inland Revenue Department nor the Land Registry, responsible for issuing Title Deeds, has a mechanism to apportion blame for the non-issuance of Title Deeds, so IPT notices will only be sent to property owners.

Title Deed idiotTHE 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.

Editors comment

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!”

Readers' comments

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  • tina says:

    in our sales agreement it stipulates we will have our deeds within 4 years of us purchasing the property which will be Oct. The property was previously owned by other people so any discrepancies over the IPT tax that may arise from the developer would the previous owners pay the tax from when they bought the property and we pay the portion of when we took ownership. We have not heard from anyone about paying the tax, we do not have title deeds which is another issue as with many people.

    Troka should be stepping in and protecting the thousands of people who are in this predicament of not having title deeds. The bankers, developers and lawyers are all looking after no 1 again themselves.

  • Janner says:

    I’ve a good idea. How about not bothering to tackle the real problems and let taxpayers continue to foot the bill via the joke that is the troika and Cypriot government …..oh, hang on, that’s already happening!!

  • Whirlybird Rtd says:

    Why don’t they start first by addressing the Developers who have memos on their various developments or perhaps against themselves (the developer’s) and force them to become bankrupt thus stop them for a while getting cash in from homes that they have saved in each site and renting out. The money saved could be recouped from them and go into the tax coffers. Or is there too much involved for them to do this?

  • Deanna says:

    Usual story ie do something one day and undo it the next. Oh the unending chaos of life in Cyprus.

  • stevie R says:

    This is going to go the same way as the Child Support Agency (CSA) went in the UK before it was abandoned. First of all target the people who are honest and open about their earnings and have a job. These were classed as the easy people to collect money from. Once it started to become harder and they had to chase and investigate the absent fathers/mothers then the administration costs outweighed the amount of funds collected in and then the files were shelved. The collection of IPT will go the same, it will cost a fortune to police and the admin cost will outstrip the revenue generated.

  • @Mike on 2014/07/30 at 9:49 am – You hit the nail on the head – I’ve seen it time and time again in the 12 years I’ve lived in Cyprus. Few seem to think through the consequences of their actions/decisions and we end up in a mess!

    You would have thought the government would have talked this through with the Land Registry and the Inland Revenue Department to see how the practical problems could be addressed.

  • Mike says:

    And to think that those proposing, drafting and amending the laws claim to be lawyers. Would you want any one of those representing you? Clowns and Circus are the first words that spring to mind and the graffiti mentioned in the editors comment is probably the most intellectual and thought through comment to come out of the house.

    Never attribute to malice what is so adequately explained by stupidity someone once said. How true!

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