SPEAKING to the Cyprus Mail yesterday Pavlos Loizou, a consultant and member of the Cyprus Royal Institution of Chartered Surveyors (RICS), commented on the government’s property tax hike proposals (for details see Tuesday’s report ‘Property tax set to increase‘).
Mr Loizou said that although home owners will now be called on to pay more tax, it is property developers, and those with considerable property to their name who will be most impacted.
Loizou said that some (property developers) may not have liquidity to pay taxes but he hailed the fact that the changes will give some property developers an incentive to sell their land banks. “Anyone who buys property will have an incentive to do something with it rather than let it sit,” he said, adding “Look at Nicosia with its empty plots.”
Having property in the heart of a city and not doing anything with it forces people to move further out and spend more time and money commuting, and forces the government to build more roads, install more street lights and the like, he said.
One of the proposals contained in the troika draft memorandum to the Cyprus government was to “Ensure additional revenue from property taxation of at least €20 million.” The counter-proposals put forward by the government set the level at €29 million/annum.
Equitable property taxation needed
At the present time, Cyprus’ Immovable Property taxation system is inequitable.
Once a house has been built on a plot of land and included on the Title Deed, the Land Registry reassesses the property’s 1980 value and updates the Title Deed accordingly. Obviously, this value will be more as it now made up of the 1980 value of the land plus the 1980 value of the property/building that has been constructed on that land – and it is this value that is used to assess a property owner’s Immovable Property Tax liability.
But the system is inequitable as there is no legal requirement to add a house or any other building on a plot of land to its Title Deed, thereby depriving the state of much-needed revenue – and it’s all perfectly legal!
Furthermore, as local property taxes paid to the Community are also based on the Land Registry’s 1980 valuation, local government loses out as well.
It’s been estimated that some 50% of buildings island-wide have not been to Title Deeds.
Shouldn’t the Government set a level the playing field so that any tax increases can be shared equitably by all those owning property?