Cyprus Mail
CM Regular Columnist

Playing games with property taxes

By Hermes Solomon

MIRACLES TO alleviate dire poverty promised by our president will begin on July the first 2014 and not before. On that date, the poor and struggling will receive help in paying their mortgages or rent, feeding themselves, their electricity and other outstanding ‘exceptional’ bills. Pensioners living below the poverty line (which was around six hundred euros a month) will also be shown some consideration, probably towards heating their homes with coupons exchanged for olives, black bread and sun dried trachanas, staple fodder which fed our forefathers throughout those harsh winter months in the mountains or bitterly windswept plains of this formerly, and now again, impoverished island.
Evidently means tested, specifics remain thus far vague and unannounced, although the value of your home will be included in any welfare pay-out equation – our president’s word as good as his bond. The bad news is that those individuals receiving two or three different pay-outs in total exceeding 2,000 euros monthly will be reduced to one when all social benefit, unemployment and welfare departments come under one roof next year – this move aimed at reducing exploitation of the system and reducing government hand-outs.
We have yet to be told by our president how the impoverished are expected to survive from now until next July – hot air circulating in abundance from the day he took over as ‘chef of the kitchen’ from ‘cauliflower head’.
Householders (many double mortgaged at interest rates of 9 per cent or more) whose title deeds are in the hands of the banks, bankrupt property developers or lackadaisical land registries, will probably be evicted or pay rent to the mortgagee subsidised by taxpayers lest their homes be repossessed and join the long queue of already unsalable and empty properties.
And to cap it all, we are far from finished with surreptitious increases in taxation. My municipality increased the cost of emptying dustbins by 20 per cent this year, removing subsidies to single owner/occupiers and pensioners – we now all pay the same – a family of five and an elderly lady living alone. Are those presidential promises of help in the pipeline ‘pour les démunies’ purely pipedreams?
On what basis will the 2014 Immovable Property Tax (IPT) reassessments be made given the present catastrophic fall in house values?
Last week, a frustrated expat resident of Paphos collected a 2013 IPT assessment form from his local Inland Revenue tax payment office. He completed the form, returned it by hand to a clerk at the IR office, who checked the amounts with the help of a hand held calculator before Frustrated was permitted to pay the tax well ahead of the October 15 deadline. For his supreme effort he received a ten per cent discount.
He noticed that completed expat payment forms sat alongside those of Cypriots – the two piles equal in height when ex-pats number just 10 per cent of the Paphos District population. Could it be that most of my compatriots have yet to register their homes and pay transfer tax never mind IPT?
Frustrated complained about the unfairness of property taxes in general, saying that in all other EU member states it is based on the value of the property with no discounts/allowances for the number of owners whether more than one or as many as ten.
Take IPT here for example: if a property has a valuation of 60,000 euros at 1980 value, a single owner pays 40,000 at 0.6 per cent (240 euros) plus 20,000 at 0.8 per cent (160 euros) which gives a total of 400 euros IPT payable per annum.
Two owners on title deeds pay 30,000 at 0.6 per cent (180 euros each) making a total of 360 euros per annum, a saving of 40 euros.
For larger property values the difference is much greater, which seems unfair to those single person property owners on just one salary or small pension.
On the other hand, transfer taxes charged on the purchase of property highlight even greater disparities, which I will demonstrate in Cyprus pounds as the calculations are easier.
For a single name on title deeds of a property that cost 200,000 Cyprus pounds, transfer fees were charged at 3 per cent on the first 50,000, five percent on the next 50,000 and 8 per cent on the final 100,000, giving a total transfer tax of CY £12,000.
For two owners on title deeds fees were charged on 100,000 each: first 50,000 at 3 per cent, next 50,000 at 5 per cent giving a total transfer tax of only CY £8,000.
If there were four owners of the property, the transfer tax would be CY £1500 each – CY£6000 in total, a saving of CY £6,000 on that paid by a sole owner.
It seems totally unfair that a single person should pay 50 per cent more than a couple or twice as much as four joint owners.
When the govt. introduces the new property tax laws in 2014 are they going to remove ridiculous anomalies?
Were those ‘thousands’ of Chinese property buyers, who purchased their minimum 300,000 euro two room flats, advised by developers to put at least four names on title deeds? If only one, it will have cost the purchaser more in transfer fees than their jerry built flat’s are worth at today’s fast declining values.
My local pharmacist in Nicosia tells me that we should receive IPT bills by early September. Penalty dates for non-payment of IPT have been changed from 15 October to 15 November, after which an extra ten per cent is added to your bill.
By 2014, all property and land will be taxed at new 2014 valuations, says the minister of the interior!
It is currently your responsibility to declare all Cyprus property in your name. Tax will be calculated on the collected sum of your property and not individual properties.
When the unbearable heat has subsided, pop along to your local tax payment office and collect an IPT assessment form.
Those of you awaiting title deeds should beware of criminal hiking of IPT bills by your developer, and frankly, nearly all of them are as seriously bankrupt as our banks!

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