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Friday, June 5, 2020
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Playing games with property taxes

MIRACLES TO alleviate dire poverty promised by our president will begin on July the first 2014 and not before. On that date, the poor and struggling will receive help in paying their mortgages or rent, feeding themselves, their electricity and other outstanding ‘exceptional’ bills.

Pensioners living below the poverty line (which was around six hundred euros a month) will also be shown some consideration, probably towards heating their homes with coupons exchanged for olives, black bread and sun dried trachanas, staple fodder which fed our forefathers throughout those harsh winter months in the mountains or bitterly windswept plains of this formerly, and now again, impoverished island.

Evidently means tested, specifics remain thus far vague and unannounced, although the value of your home will be included in any welfare pay-out equation – our president’s word as good as his bond. The bad news is that those individuals receiving two or three different pay-outs in total exceeding 2,000 euros monthly will be reduced to one when all social benefit, unemployment and welfare departments come under one roof next year – this move aimed at reducing exploitation of the system and reducing government hand-outs.

We have yet to be told by our president how the impoverished are expected to survive from now until next July – hot air circulating in abundance from the day he took over as ‘chef of the kitchen’ from ‘cauliflower head’.

Householders (many double mortgaged at interest rates of 9 per cent or more) whose title deeds are in the hands of the banks, bankrupt property developers or lackadaisical land registries, will probably be evicted or pay rent to the mortgagee subsidised by taxpayers lest their homes be repossessed and join the long queue of already unsalable and empty properties.

And to cap it all, we are far from finished with surreptitious increases in taxation. My municipality increased the cost of emptying dustbins by 20 per cent this year, removing subsidies to single owner/occupiers and pensioners – we now all pay the same – a family of five and an elderly lady living alone. Are those presidential promises of help in the pipeline ‘pour les démunies’ purely pipedreams?

On what basis will the 2014 Immovable Property Tax (IPT) reassessments be made given the present catastrophic fall in house values?

Last week, a frustrated expat resident of Paphos collected a 2013 IPT assessment form from his local Inland Revenue tax payment office. He completed the form, returned it by hand to a clerk at the IR office, who checked the amounts with the help of a hand held calculator before Frustrated was permitted to pay the tax well ahead of the October 15 deadline. For his supreme effort he received a ten per cent discount.

He noticed that completed expat payment forms sat alongside those of Cypriots – the two piles equal in height when ex-pats number just 10 per cent of the Paphos District population. Could it be that most of my compatriots have yet to register their homes and pay transfer tax never mind IPT?

Frustrated complained about the unfairness of property taxes in general, saying that in all other EU member states it is based on the value of the property with no discounts/allowances for the number of owners whether more than one or as many as ten.

Take IPT here for example: if a property has a valuation of 60,000 euros at 1980 value, a single owner pays 40,000 at 0.6 per cent (240 euros) plus 20,000 at 0.8 per cent (160 euros) which gives a total of 400 euros IPT payable per annum.

Two owners on title deeds pay 30,000 at 0.6 per cent (180 euros each) making a total of 360 euros per annum, a saving of 40 euros.

For larger property values the difference is much greater, which seems unfair to those single person property owners on just one salary or small pension.

On the other hand, transfer taxes charged on the purchase of property highlight even greater disparities, which I will demonstrate in Cyprus pounds as the calculations are easier.

For a single name on title deeds of a property that cost 200,000 Cyprus pounds, transfer fees were charged at 3 per cent on the first 50,000, five per cent on the next 50,000 and 8 per cent on the final 100,000, giving a total transfer tax of CY £12,000.

For two owners on title deeds fees were charged on 100,000 each: first 50,000 at 3 per cent, next 50,000 at 5 per cent giving a total transfer tax of only CY £8,000.

If there were four owners of the property, the transfer tax would be CY £1,500 each – CY£6,000 in total, a saving of CY £6,000 on that paid by a sole owner.

It seems totally unfair that a single person should pay 50 per cent more than a couple or twice as much as four joint owners.

When the government introduces the new property tax laws in 2014 are they going to remove ridiculous anomalies?

Were those ‘thousands’ of Chinese property buyers, who purchased their minimum 300,000 euro two room flats, advised by developers to put at least four names on title deeds? If only one, it will have cost the purchaser more in transfer fees than their jerry built flats are worth at today’s fast declining values.

My local pharmacist in Nicosia tells me that we should receive IPT bills by early September. Penalty dates for non-payment of IPT have been changed from 15 October to 15 November, after which an extra ten per cent is added to your bill.

By 2014, all property and land will be taxed at new 2014 valuations, says the minister of the interior!

It is currently your responsibility to declare all Cyprus property in your name. Tax will be calculated on the collected sum of your property and not individual properties.

When the unbearable heat has subsided, pop along to your local tax payment office and collect an IPT assessment form.

Those of you awaiting title deeds should beware of criminal hiking of IPT bills by your developer, and frankly, nearly all of them are as seriously bankrupt as our banks!

6 COMMENTS

  1. @Graham Young – Please see Cyprus Immovable Property Tax law – that will answer some of your questions. And to find out what’s happening regarding the deeds, ask your developer the following:

    When was the application for the Town Planning Permit submitted?

    Has a Building Permit been issued?

    Have any Covered Permits been requested/issued?

    Has a Certificate of Approval been applied for / issued?

    Has a Division Permit been applied for?

    Has a Certificate of Approval for the Division Permit been issued?

    Has an application been made to the District Lands’ Office for the registration of the property & issue of Title Deeds?

  2. My title deeds are with the official receiver as the site is only 50 percent finished and the developer is bankrupt. All the funds were paid to the developer and no developer mortgage are in place. The properties are worthless and unsellable. Who is responsible for the IPT

  3. I purchased a one bed off plan in 2002 @ 41,000 CYP. I have heard rumours that some of my neighbours have been told their deeds are “ready” earlier this year, I have a small mortgage on my property with the BOC, approx 50 months remaining with no arrears.

    I have heard nothing whatsoever, with the exception of a bill arriving, the other day, from Paphos sewerage for 188 euros with 148 euros of “arrears”, I was told in 2004 by Paphos sewerage, when I received and went to pay a very small sewerage bill back in 2004, ” I would not need to pay this bill until I received my deeds” and I have heard nothing from them since, except for this bill the other day. I have also got married since I bought the property.

    The sales contract is in my name only. Should I find out now, or do nothing, or start pursuing land registry, developer etc. or what happens if I do nothing. like I have done for the last 10+ years. I have no intentions of selling. I did check with land registry 2 years ago , and developer has had no mortgages on the property since 2008.

    If I bought for 41,000 CYP what will the value be as at 1980 and do I pay the IPT if I have not got the deeds yet. I would be extremely grateful if any one has any thoughts on any of my points raised.

  4. Thank you Hermes S for this excellent article : you give some sound insights into how rickety, time-consuming and, often it seems, corrupt the processes and procedures of government and certain ‘professions’ and vested-interests are in RoC. So the whole IPT reorganisation has been put back to July ’14 and thus many poor and deserving will have to wait for their ‘revised benefits’ whilst those concerned try to unscramble the shambolic property, legal and taxation situations that have been allowed to develop over recent decades. Meantime it seems those who have not been paying their Cyprus taxes will now have a further year to try conjure up new ways of ‘beating the system’?

    Whilst, at the same time we read in the Sunday Mail that, surprise, surprise, the politicians in this country are muscling in on the next ‘great white hope’, MedGas, seemingly wanting to ‘run the show’ and sideline others known to have far greater knowledge and experience of oil, gas and the vitally important structuring of the potentially game-changing (in terms of impacts on the currently beleaguered Cyprus economy) LNG.

    This starts to look like another ‘recipe for disaster’, The all important Cyprus LNG ‘roadmap’ may well get delayed as a result. We are going to get it seems the successful ‘Norwegian model’ – but ‘with a Cypriot twist’ – with politicians and ‘political appointees’ running the show and a handful of experienced experts being carefully manipulated further down the line? The Cyprus government simply cannot afford to make any mistakes in harnessing this ‘once in a lifetime’ set of opportunities.

  5. Hermes Solomon your fine article higlights the plight of thousands of innocent people who are caught up in this unholy fiasco. What will be the fate of those who allowed this catastrophe to happen. The politicians, the bankers, the greedy developers and the lawyers who legalised it all. Will they be subject to the same hardships. Will they have their homes taken away from them?. Maybe these trusted people have already made arrangements to protect their “private fortunes”.

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