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IMF: Reinstate Immovable Property Tax

The International Monetary Fund (IMF) has called on Cyprus to consider reinstating the Immovable Property Tax, which was withdrawn this year, and raising transfer duty to increase revenues.

property taxIn a Concluding Statement following its recent mission to Cyprus, the IMF has made a number of recommendations on real estate including reinstating the annual Immovable Property Tax (IPT), raising transfer fees and streamlining the procedures from issuing and transferring Title Deeds:

Policy adjustments may be needed to avoid a potentially unsustainable increase in construction activity.

Several investment incentives, including the citizenship-by-investment (CbI) scheme, provided welcome support to construction and the economy more broadly in the aftermath of the crisis, and construction of luxury residential and tourist properties – financed mainly by foreign equity – has been brisk. However, this support has now achieved its goal, and could turn procyclical. Further decoupling the scheme’s eligibility requirements from real estate would help avoid excessive concentration of economic activity, and reduce the risk of over-supply of luxury properties.

Procedures for issuing and transferring title deeds for new properties should be streamlined, with timely transfer of titles to buyers. If signs emerge that construction in the luxury market is becoming reliant on domestic credit or activity is spilling over to other segments, tightening bank lending standards and raising macroprudential capital requirements would be appropriate.

Reinstating the recently rescinded immovable property tax and raising transfer duty on immovable property would provide additional countercyclical tools.

Further reading

Cyprus: Staff Concluding Statement of the 2017 Article IV Mission

Readers' comments

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  • Kate says:

    Morning all, Ref. IPT.
    Like you, my land, house, utilities, house insurance and all ongoing maintenance of my property have been paid for by me with the money I have earned and paid tax on to the government my whole working life. The government has not, and will not, be contributing in anyway towards the building of, or the maintenance of my house and land ever. So why am I obliged to pay the government a single euro of tax on my immovable property? did I miss the small print…

    I have paid my IPT and local taxes when due, I understand that IPT in some form is paid world wide, I just don’t know why?

    Ed: IPT is a wealth tax levied on the taxable value of a property. For example in New York there is a ‘mansion tax’ levied on high value properties when they are sold and a mansion tax was discussed in the UK in 2009.

  • embapaphos says:

    I have no doubt when the state coffers start to dwindle the govt, will impose the tax again, after all was it not Hasikos the former interior minister who sung the praises of the tax and how every country in the world has IPT why should Cyprus be different?

  • Deanna says:

    Good advice.
    Re Transfer Duty; I think owners should pay whatever the rate was when they paid for their (new) properties, It’s enough to be penalised by waiting xx years after payment without having an inflated rate thrust upon them.

    Ed: I feel that the government should impose penalties for those who delay/refuse to pay the Property Transfer Fees when deeds become available.

  • clive fletcher says:

    The Cyprus Government should give all the IMF team a free crew-cut when they leave just to remind them of the financial devastation they caused last time.

    Taxes on a country’s property should be the concern of the independent country concerned.

    Ed: The financial devastation was caused by the IMF, etc. it was caused by the village idiot and his akelites supposedly running the country at that time and who left a stinking mess behind for the Anastasiades government to clear up.

  • Zemo Munro says:

    Maybe the IMF should also recommend more competition between Cyprus Estate Agents who, All continue to charge an Unhealthy 5% commission to sellers of property here in Cyprus. Making Cyprus one of the most expensive within the European Union!

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