By Poly Pantelides
ALL OWNERS of property in Cyprus registered in their name as of January 1 this year will need to pay annual immovable property tax, authorities have said.
The Inland Revenue Department (IRD) will tax owners based on the assessed price of their properties as of 1980. The land registry is expected to update their records by the end of the month, said its acting head Kleanthis Kleanthous.
From next year, Immoveable Property Tax (IPT) will be based on 2013 values as agreed with Cyprus’ international lenders in the Memorandum of Understanding (MoU), Kleanthous said. But the government decided that for “the purposes of social justice but also equal distribution of the burden of taxation” to impose 1980s values when taxing IPT this year, he added.
Because title deeds do not necessarily include assessed 1980s values, the land registry will inform everyone in writing of any changes in the assessed prices of their properties.
The onus is on the owners to provide the land registry with a current address; Kleanthous said the land registry is obliged to send relevant information to owners’ declared address.
Property owners can wait for a tax bill to be posted by IRD in the next two months, or else submit their own declaration, an IRD announcement said last week.
A land registry official clarified that owners without title deeds will also be informed of their properties’ assessed value for the purposes of IPT taxation, using sales transaction records to assess the 1980 value.
Kleanthous said they needed to update their records in relation to an estimated 30,000 to 40,000 thousand properties.
There will be a 10 per cent tax discount for anyone who files valid tax forms to the IRD by October 15, and a 10 per cent penalty on those who pay after November 15 this year, chief revenue officer Liana Charalambous said.
Anyone who has submitted an address abroad will be sent a tax bill in that address, she added. People can inform either the land registry or inland revenue of any change in address, Charalambous said.
The new tax brackets are as follows: up to €40,000, 0.60 per cent (minimum €75); €40,001 to €120,000, 0.8 per cent; €120,001 to €170,000, 0.9 per cent; €170,001 to €300,000, 1.10 per cent; €300,001 to €500,000, 1.30 per cent; €500,001 to €800,000, 1.50 per cent; €800,001 to €3,000,000, 1.70 per cent; and more than €3,000,000, 1.90 per cent.
The amount owed is calculated according to the tax payable per bracket, and not on the sum total of the assessed value. For example, a property assessed to be worth €120,000 as of 1980 will be subject to a tax of €880: €240 for the first bracket plus €639,99 for the second bracket coming to €879.9, the sum of 0.006 times €40,000, (€240) plus 0.008 times €79,999, (€639.9). Two owners of a property, owning 50 per cent worth €20,000 will each pay 0.60 per cent of €10,000, for example.
Meanwhile, Kleanthous said the land registry had “tens of thousands of title deeds” to issue this year, to meet their MoU obligations which include clearing a backlog. It is believed overdue title deeds number around 130,000. To avoid future delays – caused by purchasers’ title deeds not issued as soon as a purchase or development agreement was finalised – Cyprus authorities have agreed in the MoU to implement “guaranteed timeframes” for issuing building certificates and title deeds by the end of next year.
Although Kleanthous said that in terms of this year’s IPT they did not expect any delays at their end, the IRD may also deal with any discrepancy in taxation, by requesting for supplementary amounts later on in the year, for example.
The IRD said tax forms will be made available in English on their website: www.mof.gov.cy/ird (choose English on the sidebar).