2013 property tax bill increases the rate of immovable property tax for all property owners

In accordance with the Memorandum of Understanding agreed between the Republic of Cyprus and the Troika, the Cyprus Parliament has recently passed new legislation with respect to taxation on immovable property which shall be applied for tax years 2013–2014.

The new law amends the Immovable Property Tax Law (Law 24/80) (the “Law”), applies to all immovable property tax (“IPT”) and is payable no later than 30th September of each year. A penalty of 10% of the capital amount is imposed for late payments but a discount of 10% is allowed for tax paid no later than 31st August.

What is immovable property tax and how is it calculated in Cyprus?

IPT is an annual tax that must be paid no later than 30th September every year on all immovable property registered in an owner’s name. Both individuals and companies fall within the remit of the Law.

Calculation of IPT is conducted by the Ministry of Finance in accordance with the Law and is based on 1980’s estimated sale values of such properties.

The Law states that a minimum IPT liability of €75. A simple guide to calculating your likely IPT tax bill is to use 1980’s value bands multiplied by the relevant tax rate as follows:

1980s Value Band Rate of Tax
Up to €40,000 0.6%
Next €80,000 0.8%
Next €50,000 0.9%
Next €130,000 1.1%
Next €200,000 1.3%
Next €300,000 1.5%
Next €2,200,000 1.7%
> €3million 1.9%

It is fair to say that most residential properties will be charged IPT at the lower rates.

So, for a property that has a 1980s value of €100,000, the sole owner will be asked to pay as follows:

  • For the first €40,000@ 0.6% = €240
  • For the next €60,000@ 0.8% = €480
  • Total IPT = €720

If IPT is paid on or before 31st August there will be a saving of €72 but if the sole owner pays from 1st October he will have to pay €792 rather than €720.

Where there are two owners of a property, each owner is liable for IPT based on half the property’s value i.e. and by continuing the above example, €100,000 / 2 = €50,000:

  • For the first €40,000@ 0.6% = €240
  • For the next €10,000 @ 0.8% = €80
  • €320 payable by each owner i.e. a total IPT tax liability in relation to this property = €640.

Are overseas residents entitled to a discount?

There is no distinction between permanent residents and overseas residents in the Law. An overseas resident should use a representative in Cyprus (such as a lawyer) to pay the relevant IPT on their behalf.

What happens if I am not a registered owner and do not have title deeds?

If you do not have a title deed and your developer has been paying IPT on your behalf over several years; it is very important that your developer provides you with documentation confirming what he has paid to the Inland Revenue. If the developer is not forthcoming with this information then we would suggest that independent legal advice is taken as this could certainly save you money in the long run.

The information and opinions within this article are for information purposes only. They are not intended to constitute legal or other professional advice, and should not be relied on or treated as a substitute for specific advice relevant to your particular circumstances.

 

About the author

Andrea Pavlou Cyprus Property Lawyer

Andrea holds a BA (Hons) from the University of Surrey, a Graduate Diploma in Law from the College of Law and was admitted as a Solicitor of England and Wales in 2000. She moved to Cyprus in 2003 and is a member of the Cyprus Bar Association.

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