- Cyprus Property News Magazine - http://www.news.cyprus-property-buyers.com -

Immovable Property Tax a malignant tumour

Source: Cyprus Mail

Source: Cyprus Mail

AN ACCOUNTS clerk at one of Cyprus’ largest and most respected construction companies (yes, they exist) spent her annual summer holiday ascertaining which of the company’s (sold) properties – whose ‘occupants’ await title deeds – would be sent their Immovable Property Tax (IPT) bills directly by the relevant authority.

Unfortunately for the company, forty per cent of their housing stock remains unsold.

IPT bills amounting to fifty thousand euros will fall to the company, which now seeks to negotiate ‘better terms’ with the minister of the interior to reduce the load – as will hoteliers, large manufacturers and farmers.

‘A deal’ was struck between bankrupt developers and Interior Minister Socratis Hasikos to stop outright theft of both the state and ‘untitled occupants’, who were previously invoiced IPT plus ‘outrageous’ commission by those same developers, many of which are not paying their bills.

New 2013 valuations can be found on the government website of the department of lands and surveys (DLS) at www.moi.gov.cy/dls – but have to hand your title deed details.

A resident of Peyia printed out the cadastral plan which should have shown a total of 48 plots with houses, but only 16 houses of the 48 are shown on the plan.

If registration tax is paid on the purchase of a plot, it costs almost nothing to register the house on that plot. But by not registering the house you avoid paying refuse collection and higher local and national IPT charges.

In other words, blatant tax evasion! Pictured is a Peyia site plan (sheet 45/Plan 17W1/Block 3). The outlined smaller parcel is a field of 3971 m². Its 2013 valuation of 337,500 euros works out at 85 euros m².

The larger parcel is 5368 m² with two very large houses and pool. Its 2013 valuation is 456,300 euros, which also works out at 85 euros m². Yet, it seems that no account has been taken of the two large houses and pool, which are clearly visible on the DLS website.

The new 2013 valuations will be seen as yet higher indirect taxation in 2015 for ‘high density build’ concrete palaces even though Hasikos claimed that IPT bills would be reduced after the DLS had discovered a further 300,000 unregistered properties/land, all clearly visible on Google Earth.

Hasikos also said that the number of ‘untitled’ would be reduced from 100,000 to around 2000 by the end of this year. You bet it will!

And what about those 300,000 Googled.

Will they be backdated to pay 2013 as well as 2014 IPT or will the minister make the same offer as did some genius from the ministry of transport for non-payers of road fund licences?

IPT bills this September are based on 1980 valuations and charged at the same amount as last year; a 15 per cent discount (10 per cent in 2013) deductible if paid before the end of October.

IPT on 2013 valuations will become payable in 2015. If it is below 200,000 euros, you should have nothing to pay ‘promises’ Hasikos – anything above will be charged at one euro per thousand.

The new IPT was initially announced as a one off by Hasikos. But he is blessed with what the Chinese call ‘sweet lips’ – unaccountable gift of the gab just like the rest of them.

The disgruntled will have a year to dispute 2013 valuations at their own cost. But when you consider that the DLS took barely six months to arrive at 2013 valuations yet all of ten years to produce 1980 valuations, thousands of disputes between the DLS and surveyors employed by ‘les disputants’ are unavoidable.

Ten or more names on high density land title deeds will reduce IPT bills considerably (allowance of 12,500 euros per head) and this is the ‘artful’ way forward. But beware! You will never sell the property unless all ten named agree. No easy task in Cyprus.

The construction company’s accounts clerk likened the DLS to a malignant cancer (chaotic). Fearful of an operation to remove the cancer (reorganise) and thereafter undergo radiotherapy (public outcry), the DLS forewent the operation (prevaricated) in the hope that the cancer would not spread.

But when the troika arrived last year, the DLS complained of a noticeable loss of appetite (income) and body weight (files) combined with perpetual fatigue (laziness) caused by a troika demand to reduce considerably title deed backlog.

Most other government departments – health, education, Inland Revenue, defence, etc. – will be obliged by the MOU to undergo drastic reorganisation to improve the manner in which they conduct their affairs.

Crying ‘foul play’, as the administration will, means drastic measures to reduce costs/debt and increase taxation are inevitable. Let’s take NPLs for example.

Stage one: The House of Reps is presented with a troika NPL repossession bill. All political parties pompously reject it.

Stage two: The Minfin is threatened by the troika with non-payment of the next tranche if the bill is not passed. Political parties rumble discontent but still reject the bill.

Stage three: The House is threatened by the Central Bank with the demise of our banks if the bill is not passed. There is yet more senseless mumbling by politicians and union bosses, but a silent majority ‘crosses the floor’.

Stage four: The economy is threatened with total collapse if the bill is not passed followed by exit from the eurozone and hyperinflation. And to top that lot, Archbishop Chrysostomos requests so called bankrupt developers as well as doctors, lawyers et al, to return illicitly hidden funds from abroad.

The shock horror bill on repossessions of NPLs will be passed intact with a ‘vague’ proviso that the government will ‘protect’ vulnerable groups from the hangman (the troika), who is just waiting in the wings for the indebted to climb the scaffold steps.

The vast majority of NPLs are owed by developers, and to a lesser extent SMEs, employees of banks, the administration and SGOs, who all received preferential terms from banks to build huge concrete palaces in high density areas, ergo insurmountable debt and costlier 2015 IPT.