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Immovable Property Tax 2016

The Cyprus parliament has agreed that Immovable Property Tax for 2016 will be based on 1980 values but reduced by 75 per cent on the amount paid last year; IPT will be abolished in 2017.

Immovable Property TaxDISY LEADER Averof Neophytou’s radical proposal for slashing the state’s immovable property tax (IPT) by 75 per cent this year, and scrapping it altogether in 2017, was passed by a majority vote in Thursday’s parliamentary plenum.

The vote followed days of hectic haggling between the government and parties, each of which seemed to have its own proposal on the matter.

Ruling DISY proposed a 75 per cent discount on payable IPT for this year, and doing away the tax altogether in 2017. Its bill stipulated that IPT for 2016 would be based on 1980s prices.

The proposal was eventually backed by EDEK, DIKO, and the Solidarity movement.

It calls for payment of 25 per cent of the IPT each property owner was asked to pay in 2015, provided payment comes by October 31, 2016.

If the payable IPT is paid after this date and before year’s end, a 2.5 per cent penalty will be slapped onto it, bringing the amount due to 27.5 per cent of last year’s dues.

Payment after year-end will see a 10-per-cent penalty imposed on the amount payable.

The proposal garnered 29 votes of support, and was opposed by AKEL’s 18 votes, as well as ELAM’s two.

The Citizens’ Alliance three deputies, as well as the Greens’ two, abstained.

A government bill, which was rejected by the plenum, envisaged a flat rate on property values of 2013, as determined by the Land Registry. The finance ministry’s final proposal was a 0.035 per cent flat rate which would have raised €45 million. Of this, the central government would take €30 million and the remaining €15 million would be given to local authorities which would have to scrap their property tax.

Meanwhile, AKEL and DIKO had initially submitted their own proposal which stipulated a progressive, staggered IPT, exempting low-value properties from any tax, while imposing a higher rate to those of high value.

Addressing the plenum before the vote, Neophytou rejected criticism that DISY has served the interests of the wealthy by cutting the IPT tax rate horizontally.

“The wealthy may have more debt than the value of their assets, whereas those who have never paid tax may, in fact, be the truly rich,” he said.

He was responding to cries that the benefits of cutting the rate would be felt disproportionately more by the big land-owners and less by those with little immovable property.

“The government has left the less-privileged to pick up the tab in a bid to serve big private interests,” AKEL spokesman Giorgos Loucaides said.

“We are in favour of scrapping this tax, but by turning it into a tax on the wealthy, not in favour of the very few privileged.”

DIKO’s Christiana Erotocritou said that the party supported the fairest option “under the circumstances”.

“The 2013 valuations create many distortions, and those from 1980 are unfair, but the choice was between the devil we know, meaning the 1980 distortions, and the one we don’t, meaning the unknowns that will emerge if we employ the 2013 pricings,” she said.

Although his party backed the proposal, EDEK leader Marinos Sizopoulos said the 1980 prices are unfair, whereas the 2013 valuations were based on the distorted prices created by the property bubble.

The Citizens’ Alliance Giorgos Lillikas said all the proposals tabled contained injustices.

“We need to move toward fairness,” he said.

“As a compromise, we will vote for the least unfair proposal.”

Readers' comments

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  • Jill says:

    Editor’s Comment: ‘Now that the Troika’s gone’…..

    Does this mean we can all say goodbye to getting our Title Deeds as well? Again, I reiterate, although people have been round from the Council (we assume) to check our buildings, still we hear absolutely nothing regarding Title Deeds. We applied in October last year and were told 3 months – that’s a long 3 months isn’t it?

    And, of course, August sees everything closing down so that’s yet another month gone by….. My fear that I voiced at the time has come to pass – once the bailout money was handed over and the Troika no longer anywhere to either contact or flex their muscles, once again, everything goes back to ‘normal’…. Sorry about the constant moaning Nigel – we know you’ve worked so hard on behalf of us all and we’re truly grateful as always.

    Ed: You will get your deeds eventually as it’s now the law (and Cyprus had to implement it before it received a tranche of the bailout loan). Many thousands of people have applied for their Title Deeds.

    If the Title Deeds are available, the process is relatively straightforward. But in some cases (at least 20,000 to my knowledge) the Land Registry cannot issue deeds because the planning authorities have yet to issue approval certificates – and in some cases developers built without securing the necessary permits, they deviated from the approved plans, they encroached on someone else’s land, they haven’t paid for the certificates to be issued, etc., etc. It’s going to take some time to resolve these issues.

  • embabaphos says:

    Called the IPT tax office, they said as Nigel said the details need to be published in the Cyprus Gazette first, and those who have paid need to do nothing, as the ‘system’ will know and send out refunds. Many people have paid their IPT for 2016 already she said and they can’t have every such person turning up at the tax office with receipts asking for refunds of overpaid tax….

    Less tax is good, but I would bet IF the public sector hiring starts again and the pay rises start next year, that again tax hikes will come again a few years down the line. Finance minister seems to be the only one with any sense, warning of consequences.

    Ed: The government will have to get some money from somewhere to repay the bailout loan – possibly by raising other taxes.

  • Martin says:

    What happens in Nicosia on Thursdays never ceases to amaze, how can they “govern” when they can’t get anything through the house without it being altered beyond recognition ? In any other country, such a minority “Government” would resign.

    As to people getting away with unpaid IPT from previous years, I would not have thought the new law would cancel their outstanding bill at the Tax Office.

    Ed: Now that the Troika has gone, no-one is keeping an eye on what they’re doing. I cannot see those who owe IPT getting any sort of amnesty. Apart from anything else, all those who have paid would demand their money back.

  • Aggis Demetriou says:

    IPT tax here in Cyprus is basically 1 Months payment of a mid range property in the UK, so very little was paid in any case.

    To abolish this tax is rather foolish and greed on behalf of these ministers as I am sure they must have many properties of their own.

    I can only wonder where the government will make up the shortfall.

    A disaster in the making.

  • Peter Davis says:

    Abolished in 2017, neither of my two neighbours have paid their IPT since its introduction and nothing has happened.

    So in 2017 they’re off scot free. So who was the fool for paying.

    Ed: Why not report them to the Tax Department?

  • Debbie says:

    I have already paid this years IPT how do I get a refund as I should have had a 75% reductions?

    Ed: You will need to make enquiries at the Tax Department. But please note that the law will not come into force until it’s been published in the Cyprus Gazette. The website cylaw.org lists all the laws enacted this year – use Google Chrome to translate.

  • amichael says:

    That will teach me to read carefully the wording of previous articles as I thought the tax WAS going to be based on 2013 prices…..so it had yet to get approval! but now its 100% certain that it will be 1980 prices.

    So, next year there will be no property tax to pay…period i.e neither local or govt.?

    So, its just water, electricity, sewage and garbage at a minimum to pay?

    Ed: It isn’t clear what will happen with local property taxes next year, but Immovable Property Tax paid to the Tax Department will be abolished.

    The government had agreed with the Troika “By end-October 2015, adopt the legislation on the reformed recurrent immovable property tax with effect from January 2016, based on the most updated General Valuation for all immovable properties. The new immovable property tax should be based on the recommendations of the study on the consolidation of property taxes, should ensure a broad tax base and should be fiscally neutral, taking also into account the reduction of the transfer fee. The amendments to the IPT legislation will be submitted for timely consultation with programme partners.”

    However, MPs refused back the the government’s agreement and a ‘compromise’ has been reached.

  • Linda Hayes says:

    How much is it if you purchased a property October 2015 at 350 Euros

    Ed: Immovable Property Tax is based on the 1980 value of the property as shown on its Title Deed. Assuming that you’ve registered yourself and the property with the Tax Department (see Paying Immovable Property Tax the Tax Department will send you an IPT notice.

    As I do not know the 1980 value of the property you purchased I cannot say what your IPT bill will be.

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