IPT exempt?

[Joodles]

Hi Nigel

We wonder if you could help us about IPT. We have a very small studio (35 sqm) on a complex of about 90 properties in Paphos, without title deeds. Pafilia have asked us for €128.05 to cover IPT. We asked for the 1980 value and they advised it was €6739.

I realise this is only a very small amount of tax, compared to some people's commitments, but I feel sure our property should be exempt from the IPT, as the value is under €12500, what more it is jointly owned with my husband.

I have emailed Pafilia to tell them that I don't think this tax should apply, but Pafilia disagree, part of their reply says:....
'The rate charged at present is 19 per thousand. This is based on the sliding scale which takes into account all the properties registered in an owner’s name. In this case it is all the properties registered in Pafilia’s name which is at a higher rate than you will be required to pay once the separate title deed is transferred to your name.'

From everything I have read I can't see that Pafilia are correct. Would you please be kind enough to advise if there's any truth in what they are telling us? Should we pay this €128.05?

Many thanks.

[Nigel Howarth]

Hi Joodles and welcome to the forum.

If you read through your contract you’ll probably find a clause similar to the following:

“All taxes, levies, duties or charges raised on or in connection with the property hereby sold after the purchaser has been put in possession of the property will be the responsibility of the purchaser.”

If your contract includes this (or a similar clause) you are obliged to pay the developer the amount of IPT he has paid on your behalf from the date you took delivery of the property.

Pafilia has to pay Immovable Property Tax on all the property registered in their name (including yours). This tax isn't calculated on a property by property basis but on the total value of all the property registered in their name. As a consequence they will probably be paying IPT at the top rate of 1.9%.

When you get the deeds you will be able to apply to the Land Registry for a refund of any legitimate overpayments of IPT you may have made, but see this letter from the Interior Ministry as your developer will need to provide you with information for your claim.

For more information, please see Cyprus Immovable Property Tax law.

In summary, you need to refund the developer the IPT he has paid on the property you purchased and then reclaim it once the deeds have been issued and registered in your name.

It's a crazy system!

Regards,

[Joodles]

Hi Nigel

Thanks so much for explaining this. We do have the clause in our contract that you describe. The exemption for lower valued properties gave us hope that we might not have to pay this, but at least I know what we have been told is correct, albeit crazy! Hopefully I can get this paid tonight to get the 10% discount!

Thank you again for clarifying this.
Joodles