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Immovable Property Tax up in the air

Following the wrecking of the draft bill to change the Immovable Property Tax rates for 2014, the Inland Revenue Department has suggested that last year’s law be extended for a further year.

ACCORDING to information allegedly leaked from Parliament, the Inland Revenue Department has recommended that the Immovable Property Tax Act of 2013 be extended for a further year, which would mean collecting IPT based on 1980 values as in the past.

However after some consideration, Parliament has said that there is a need to revise the 2013 Act despite the Inland Revenue’s recommendation.

The continuation of the current regime is favoured by the majority of political parties as they consider that draft bill proposed, which is based on 2013 property values, shifts the burden of taxation unfairly. (see New Immovable Property Tax lies).

AKEL, Environmentalists and some other parties are expected to table amendments that would raise last year’s tax-free threshold from €12,500 to €40,000.

George Perdikis of the Green Party has been reported as being in favour of extending the 2013 Act with amendments that would reduce the IPT collected from €138 million to between €90 and €120 million.

Apparently, efforts are being made to include the 299,000 newly discovered properties into the mix, but these will also need to be taxed at their 1980 values.

Protecting property developers

DIKO MP Angelos Votsis is expected to submit a draft bill requiring those who have deposited their contracts of sale at the Land Registry but who have yet to receive the Title Deeds to pay the Immovable Property Tax due rather than the developers. (A similar proposal was submitted last year).

Other possible options

Several options for setting the tax based on 2013 property values have been leaked, including:

  • Tax free threshold set at €100,000 and remaining taxpayers pay at 0.11% (expected to generate €136 million).
  • Tax free threshold set at €130,000 and remaining taxpayers pay at 0.11% (expected to generate €127.9 million).
  • Tax free threshold set at €130,000 and remaining taxpayers pay 0.09% for property holdings valued up to €500,000, 0.1% for property holdings up to €5 million, 0.13% for property holdings up to €10 million and 1.5% for holdings in excess of €10 million (expected to generate €125 million).
  • Tax free threshold set at €100,000 and remaining taxpayers pay 0.09% for property holdings valued up to €5 million, 0.11% for property holdings up to €30 million, 0.12% for property holdings in excess of €30 million (expected to generate €138 million).
  • Tax free threshold set at €130,000 and remaining taxpayers pay 0.11% for property holdings valued up to €5 million and 0.12% for property holdings in excess of €5 million (expected to generate €129.9 million).

It is possible that Parliament will be unable to reach agreement before the summer recess and that a decision will be taken in October.

 

Readers' comments

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  • Phil says:

    Look the bottom line here is plain for all to see. The Land Register valuations on property (legal or not) is not the question here.

    They Gov and Land Registry have made another giant cook up in that they dare not consider 2013 valuations and IPT even with a reduced banding rate as they know full well that the valuations are a complete and utter b*lls up valuing property at extortionate high prices by incompetent and unqualified Land Registry personnel hence a quick fix lets put our head in the sand and deal with it next year.

    Oh yes the Gov will tell Troika, when they arrive shortly, that we found 300,000 new properties and that all valuations have been done to 2013 values but because we (Gov) cannot agree on how to implement IPT fairly so that EVERYONE pays something (not a vote winner) we have put it off till next year. But don’t worry we will be collecting much much more than last year and more than you require us to, that should keep them happy.

    And by the why Mr Troika we have also deliberately over valued property and introduced an appeal process payable on a % of that over valued property so we gain some additional revenue.

    Win win situation whichever way you look at it.

    Phil

  • @Phil on 2014/07/12 at 12:21 pm – I have read one report that says the says those who own property valued at €40,000 or less will be exempted from IPT – and that the top rate will be 1.5%.

    But I’m waiting for the law amendments to be published in the Gazette for confirming.

  • Phil says:

    Here we go again, another property fiasco, this time valuations and this will be bigger than title deeds scam.

    So here we are back to 1980 values for the purpose of IPT 2014 but hold on we have additional 300,000 properties they (land Registry) knew nothing about and then there are all those other thousands of properties that were there but never registered, so all in all how many proprieties are now registered because with the current banding rates for IPT this gov is going to collect a lot of dosh much more than is required by Troika

    Phil

  • @Pantheman on 2014/07/10 at 4:16 pm – Thanks for the heads up, I managed to find a report and have published an article – Deal reached on Immovable Property Tax.

  • Pantheman says:

    The bill to maintain the 1980 values for IPT purposes has been passed.

    Although there was something in the report (in greek) that confused me a little.

    It said that persons in possession of or using a property were liable for the tax even if the title is not in their name, however, there was a special provision that said, if it were not their fault that the title was not in their name they would be exempt.

    I’m not sure if this actually means that the developer is liable and not the house buyer???? needs to be verified.

  • Deanna says:

    OMG, am I the only one having trouble keeping-up with this?

    So, instead of implementing the 2014 (€200k threshold) which they’ve taken all year+ to work out, they’re now going to frik around with 2013 ‘values’; which, presumably, will take another xxx years to agree on.

    As MartynG says “which October”!!

  • Rosemarie Delaney says:

    Mr Votsis must be a developer in MP’s clothing. Shame Sir, trying this number on again.

  • kufrahdog says:

    The recent survey which identified and valued 299,000 previously unregistered properties for the purposes of determining the Y2013 property values for Immovable Property Tax (IPT) effective Y2014 raises an interesting question: Why would the Cypriot parliament pass a law which requires IPT to be paid on a property that is illegal in any degree?

    The scale of property illegality and penalties was set out in the Town Planning Amnesty Law of 2011. This law also made provision for illegalities to be declared, but there was no legally binding obligation placed on registered owners (developers or purchasers) or others (purchasers but not registered owners) to make the declaration.

    The criteria that applied to the inspection survey to identify and value the recently found 299,000 properties were not made known to the public as far as I am aware. But it would be reasonable to suppose that the inspectors knew about the planning and building criteria applicable in the areas they inspected and that they were able to assess whether a property was legal or not; this was certainly the case in our village.

    It is a self-evident truth that it if a property is illegal in any degree, then its open market value would be lower than a comparable property that is legal. Did the Land Registry take this fact into account when they calculated the Y2013 valuations? It would be reasonable to assume that they did not.

    If the law requires IPT to be charged on properties that are illegal in any degree, then the government must pass a true amnesty in respect of those properties that are now illegal and declare that all properties are legal and, as such, that demolition is not applicable to these properties. Furthermore, the government should take immediate steps to rezone the land, where necessary, that these previously illegal properties presently occupy.

    There, I have flown the kite! This is a difficult subject and in the interest of brevity it is not possible to mention all the pros and cons of the argument. KD.

  • Adrian says:

    What a shambles. I wonder who dresses these people in the morning because they are not capable of deciding anything. I suppose if you don’t make a decision you can’t be blamed for doing something wrong!! Meanwhile everyone else is paying and they dodgers breathe a sigh of relief(usually in Greek) at the incompetence of the government.

  • MartynG says:

    Do they have any particular October in mind??

  • @Peter Davis on 2014/07/10 at 8:08 am – I expect the collection costs would outweigh the tax revenue collected.

    Would you apply the same principal (everyone has to pay something) to Income Tax?

  • Peter Davis says:

    Why is there a need to exempt anyone?

    In my village some of those who paid nothing last year are driving new Mercs. So they will paying the same amount this years to support our Government.

    Even in the UK everyone has to give something, instead of 45% supporting the rest of the 55%

  • karen says:

    Just issue everyone with their deeds and let us all pay our own property bills without getting ripped off by developers…. simple?

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