Cyprus Home Property Tax Scare

An article in the respected Cyprus Mail sent shock waves running throughout the island of Cyprus with tremors that extended all the way to investors in Britain and the USA as the Cyprus Finance Minister Charilaos Stavrakis yesterday unveiled tax changes.

The values of land in 2010 are 20 times higher than those of 2008 and this means that the Cypriot citizen that currently pays a tax on real estate of €1 thousand, next year he will be called to pay €20 thousand”, said Mr. Averof Neophytou, the Vice President of DISY according to Stockwatch, Cyprus. [We think he meant 1980 rather than 2008 and even then the figures look wrong, Ed.]

So was Stavrakis correctly reported in the Mail (we hope so !!,  Ed.) as saying that his package will introduce higher tax on property property other than a home by adjusting valuations on real estate unchanged for 30 years?

Many people may have missed the important caveat OTHER THAN A HOME !! But it still will mean that Developers may have higher taxes to pay on land held and building projects where Title Deeds have not been issued for individual dwellings. Higher Taxes will inevitably be passed onto Cyprus property buyers and investors.  Investors must watch out for even bigger tax bills now that the 1980 Valuation will be brought up to date. Most likely it will be another nail in the increasing number of coffins needed to service the Cyprus Property Sector!!

Read on if you want to know more about these Cyprus Property Taxes. 

Background

Cyprus has lost more than €1.0 billion in earnings this year, equivalent to 6.7 points of its GDP. The drop is primarily from a slump in property sales and tourism.

The island, representing 0.2 percent of the euro zone economy, slid into recession in the second quarter of 2009. The European Commission expects Cyprus to return to 0.1 per cent growth in 2010 after a forecast contraction of 0.7 per cent in 2009.

Finance Minister Charilaos Stavrakis yesterday unveiled a fiscal package aimed at generating savings and additional revenue of €500 million annually to plug deficits seen busting euro zone limits in 2010 and 2011.

A town planning amnesty in the property sector is expected to bring in €150 million over the next two years. Authorities will also pursue cutbacks in benefits – around ten per cent – and stamp out tax evasion, which is costing the state an estimated €100 million.

Higher Property Taxes

Stavrakis’s package contains no new direct taxes, but will introduce higher tax on property other than a home by adjusting valuations on real estate unchanged for 30 years.

PLEASE NOTE “OTHER THAN A HOME”.

On what value is IMMOVABLE PROPERTY TAX in Cyprus imposed?
 
Immovable property tax is imposed in accordance with the Immovable Property Tax Laws 1980-2004, on the value of immovable property in Cyprus, on the 1/1/1980. This value relates to the value of immovable property which belongs to an individual or a company, on the 1st January each year.

What are the current IMMOVABLE PROPERTY TAX rates?

(Rounded to nearest ‘000 for presentational reasons following conversion of CYP£ to € at Official Rate).

Value up to €170.000 – 0‰, value over €170.000 and up to €427.000 – 2,5 ‰,, value over €427.000 and up to €853.000 – 3,5 ‰,and value over €853.000 – 4,0 ‰,.

IPT rates are expressed at “€2.5 per thousand (‰,)”.You can also see that there is a sliding scale.

PLEASE NOTE “AT THE 1980 VALUE” – MOST CYPRUS PROPERTY OWNERS DO NOT PAY IPT 

Example: If your house were worth €250,000, at the 1980 value, you would pay Cyprus immovable property tax at the rate of 0.0025 (per thousand) on the last €80,000 only, with the first €170.000 being exempt.

€80.000 X 0.0025 = €200 yearly.

The Land Registry keeping the methodology for calculating 1980 values secret but it is disclosed on your Title Deed.

BUT WHAT IF YOU ARE STILL WAITING FOR YOUR TITLE DEED?

Then you could be subject to what The Cyprus Property Action Group report as illegal activities here.

http://www.cyprus-property-action-group.net/issues/immovable-property-tax.htm

Watch out for even bigger tax bills now that the 1980 Valuation will be brought up to date.

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