Property Tax

[susiecoo]

Evening to all.
I know you've probably covered this a million times already but over the last few years we have paid €215.00 for both Immovable Property Taxes & Municipality payment; this year it's €360.00, does this seem correct? I can't seem to get a breakdown of the payment and I know that taxes & interest were raised this year but this seems a little steep.

As Title Deeds aren't in our possession, do we pay for the meterage of our apartment only or is it split evenly between the complex as a whole? I look forward to your response.

Thank you.

[Nigel Howarth]

Hi susiecoo and welcome to the forum.

Your developer should be providing you with a breakdown of how he reached the amount he is charging you. You can read more about this and a letter from the Interior Ministry at http://www.cyprus-property-buyers.com/law/tax.htm - I suggest that you give a copy of the letter to your developer when you ask him for the breakdown.

The top rate of Immovable Property Tax doubled from 1/1/2012 - it went from 0.4% to 0.8%. There is no reason you should be paying any interest - this is most likely a penalty imposed on the developer by the Inland Revenue for late payment.

I would say that you are paying too much, but without a breakdown I cannot say where the problem lies.

The Cyprus Property Action Group took legal opinion on this problem and wrote a long article about it that you can read at http://www.news.cyprus-property-buyers. ... s/id=00517

Regards,

[susiecoo]

Evening Nigel.
I emailed the Developer & attached the letter you suggested regarding the Property Tax breakdown. The reply was as follows:

"The company does not pay taxes on only the land but the entire project which includes the buildings. This is not an empty plot. Therefore a breakdown is not valid. Please read carefully the attached as it explains everything."

Below is an excerpt from the attached form which does nothing to clarify the situation; sorry it's a bit long winded! Is there anyway forward from here?

The taxes and dues are basically divided to IPT (Immovable Property Taxes), Municipality Property Taxes and Fees payable to the SBP (Sewerage Board of Pafos). These taxes and dues are mentioned in your contract of sale, but in case you may not be familiar with all, please see below an explanation for the contents of the statement:

Immovable Property Tax (IPT): This is a property tax that is paid to the Government annually. Until the separate title deeds for each property are issued by the District Land Office, our company as a property developing company not only has to submit a declaration of the properties which are registered on the company’s name to the relevant department of the Tax Office, but also to pay the relevant taxes once a year; if this is not done annually we will not be able to proceed with any transferring of properties to the names of any client of any project, since we must have a Tax Clearance and SBP Clearance, which are required by the District Lands Office to allow a transferring to be made.

The IPT normally is calculated on the 1980 valuation of the property. However, since the 1980 valuation is not defined until the separate title deed of each individual property is issued, we have to estimate the 1980 value of all properties as a whole in accordance with the instructions given to us by the tax office and pay the relevant tax based on that value. The developer then uses the same percent estimation on the contract value, to allocate the taxes to each individual beneficiary “owner” of each property.

At the final stage when the separate title deeds are issued by the Land Registry and the real values are known and shown on the individual title deeds, a correction will be made on the final statement.


Thank you Nigel.

[Nigel Howarth]

Hi susiecoo

"The developer then uses the same percent estimation on the contract value" - that is the bit that is incorrect.

"we have to estimate the 1980 value of all properties as a whole in accordance with the instructions given to us by the tax office and pay the relevant tax based on that value" - that's correct.

What the developer should be doing is apportioning the tax he has paid to those who have yet to receive their deeds NOT base the charges on the contract value.

If you read the legal opinion that CPAG obtained, see Immovable property tax & fraudulent practices, it says:

"the purchaser may ask the developer to provide him with evidence on the IPT he paid for the property (land) upon which the purchased property has been erected and pay the share of this property to the IPT paid for such. In other words the purchaser may refuse to pay more than what he will be entitled to recover from the Inland Revenue, without committing breach of his agreement."

Regards,