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

Developers continue Immovable Property Tax scams

OVER the past few days we have received several emails complaining that property developers are trying to overcharge buyers for Immovable Property Tax (IPT) that has allegedly been paid to the Inland Revenue Department on their behalf.

Rather than developers basing their calculations on the assessed 1980 value of the property, as prescribed by the law, some developers are charging whatever they think people are prepared to pay.

Furthermore, these developers are refusing to allow the transfer of ownership of the property until this money has been paid; effectively extorting money by threatening to withhold Title Deeds to elicit payment.

It is relatively easy to check how much you should be paying the developer. Ask him to provide you with a copy of the Title Deed for the property.

About a third of the way down the Title Deed you will find the 1980 value of the property, which is shown on the box in red on the attached Title Deed that I have provided as an example (€60,000.00).

The annual amount of IPT payable is calculated at €4.00 for every €1,000. So in the example, the annual IPT that the developer has paid on your behalf would be €240.

I should point out that there have been cases where the Inland Revenue Department has calculated a developer’s IPT liability incorrectly and the developer has paid more tax than he should (which should be based on the 1980 value of the property as shown on its Title Deed when it is subsequently issued by the Land Registry).

Unfortunately, in these situations, the Inland Revenue Department will only reimburse buyers an amount calculated by using the 1980 value of the property as shown on its Title Deed and no more. As a consequence, these buyers are unable to claim the full amount of any overpayment; this practice by the Inland Revenue Department leaves a lot to be desired!

To calculate how much the developer should be charging you, simply multiply the annual figure by the number of years since you took delivery of the property to get the total figure.

In this example, if you took delivery of the property in 2008, the IPT charged by your developer should be no more than €720 (3 years at €240/year) – and this is the amount you could reclaim from the Inland Revenue once title to the property has been registered in your name.

You are cautioned not to pay a developer any IPT unless he:

Note that if you bought an apartment or a property on a larger development, the Inland Revenue Department will be unable to issue a certificate confirming the amount of IPT that the developer has paid for each individual unit comprising the development. What is more likely is that it will issue a certificate confirming how much IPT the developer has paid for each plot of land on which the development was built, which can then be used to calculate the IPT that the developer should be charging you more accurately.

Please refer to this letter from the Interior Ministry and print a copy and give it to your developer if he attempts to overcharge. If he refuses to cooperate, set your lawyer onto him.

We have published numerous articles in the past, including legal opinion on the matter obtained by the Cyprus Property Action Group.