Cyprus-Forum.com

[Aiyep]

We purchased an apartment in Peyia in 2004 for CY£86,000

We are now being asked by the developers to pay Immovable Property Tax (IPT) of CY£350 for the past two years (2005 & 2006).

I've looked up the subject of IPT on the internet and it seems that we should be exempt as the market value of our property was less than CY£100,000 when we purchased it.

However, our developers are saying that, because we do not yet have the title deeds and because the whole of development is valued at over CY£100,000 we must pay our share of the IPT charge. Also, they have referred us to our contract which states that, after purchasing the property, we must pay all taxes due. Surely, as IPT is not applicable to our property due to its market value, we are exempt from this charge.

Would I be right in thinking that the developer is most likely to have borrowed more money against the development of which our apartment is a part, in order to fund other developments of their's. This being the case, shouldn't the developer bear the cost of the IPT and not pass it onto us owners whose property market value is below the CY£100,000 threshold?

I would be interested to learn from others who have encountered IPT in a similar situation.

[andri_cy]

I believe you would be safer to talk to a lawyer who can review your contract and knows the laws about IPT. I do not know however that this wont cost you more than the 350. But if it is going to save you money for years to come it might be your best bet.

[Svetlana]

IPT is a further 'developers' scam'; IPT is levied by the Government on all immoveable property which had a value in excess of 100,000 pounds at 1980 values, so unless you actually owned all of Peyia, it is inappropriate.

Now, the value of the plot of land on which your evelopment was built MIGHT have had such a value in 1980 - although I doubt it. My advice is to ask the developer to pass youa copy of the Govenment IPT tax demand - which of course they will not be able to do.

Developers here have been getting away with this for years - but owners are starting to challenge these charges - quite rightly.

If you retain receipts for your IPT payments, you can reclaim some of your IPT when you get your Title Deeds, however the refund will only be on what you truy owed (in your case nothing!) rather than what you paid.

Lana

[Aiyep]

Thank you andi_cy and Lana.

Lana...do you mean if the developer cannot produce the Government IPT tax demand then we can 'legally' refuse to pay the amount they're asking us to contribute?

[nhowarth]

Hi Ayip,

> our developers are saying that, because we do not yet have the title deeds and because the whole of development is valued at over CY£100,000 we must pay our share of the IPT charge. Also, they have referred us to our contract which states that, after purchasing the property, we must pay all taxes due.

He may be correct. You need to seek advice from your lawyer. This is quite a common 'scam' that is practised by some of the property developers. Although it's a scam, it's perfectly legal - but your lawyer should have prevented you from being caught out by including appropriate clauses in your contract of sale.

> Would I be right in thinking that the developer is most likely to have borrowed more money against the development of which our apartment is a part, in order to fund other developments of their's

The developer may have mortgaged the development. But your lawyer should have discovered this when he carried out a Title Search and advised you accordingly. (What he/she should have done on finding a mortgage was to approach the developer and ask for a 'release' from the institution that loaned him the money. If the developer was unable or unwilling to get a 'release', your lawyer should have advised you not to go ahead with the purchase).

BTW, it's also possible that the developer took out a mortgage after your lawyer deposited your Contract of Sale at the Land Registry for Specific Performance. But once again, your lawyer should have prevented you from this eventuality by incorporating appropriate clauses in your contract of sale.

For more information, visit my website by clicking on the 'WWW' button below this message and take a look through the 'Legal Issues' Pages.

Regards,

[Denis_B]

Can I suggest you contact Penelope Mantis a lawyer based in Paphos email [email protected].

Penelope Athinodorou – Mantis, Advocate

Corner of N.I. Nicholaides Ave & Korivou Str.

“Penelope’s Palace”

8010 Paphos

Cyprus



Tel. No.: 00357 26 934 277

Fax No.: 00357 26 944 877


I have had the pleasure of instructing this lady to act for my purchase on recommendation of another Brit on the Island who used her. Each time I have mentioned her name to an estate agent or developer I got a very knowing look. She is a she devil with developers.

[susanbunny]

I have friends who have just been ripped off in this manner.....just another money spinner, trouble being they were buying else where, need title deeds to secure thier mortgage, so where left with no choice but pay up...they are ingenious at making up the rules as they go along here....as long as they can squeeze that last cent out of your pocket.....

Susanbunny

[Fedup]

Hi Aiyep,

We also bought a flat in Peyia, also in 2004 (same developer?), well under £100K, and find that we are also being asked to pay IPT. We have also heard that we [u]may[/u] be able to claim it back when the deeds are transferred although we heard that only 75% is refundable (?). :?
Is this normal practice? Do other developers do this? I believe it is connected with a change in legislation after Cyprus' entry into the EU. I have searched the web but can find nothing definitive.

Also, on the same statement, we are being asked to pay something called "Municipality Property Tax" (£42 per annum). Apparently this is not the same thing as the refuse collection tax, which we have paid individually anyway. The plot thickens.

Ours is only a small 1 bed flat but our "account", payable now, is £753 and includes 2 year's IPT and Municipality tax as well as this year's Common Expenses (up by 10% every year). I won't go down without a fight so watch this space. :evil:

[Aiyep]

Dear Fed Up

I guess we could be on the same development. I agree with you about the Municipality Property Tax.

We intend to refuse to pay any taxes unless we are presented with an invoice from the government or local authority. This is because we do not trust the developer. If the developer wishes us to pay taxes then we will request the developer ask the relevant authority to invoice us directly. We will then happily cough up.

[nhowarth]

Hi Aiyep & Fedup,

A number of the developers use this revenue-earning scam. You may find the bill is for 'refundable expenses' or something similar and it roughly equates to 4% of the purchase price.

It's the Registered Owner of the property who is liable for Immovable Property Tax as shown on the Title Deed to the property.

I suggest you take a look through your Contracts. If you have a clause along the lines of:

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, which time is agreed to be the date of completion, will be the responsibility of the purchaser.

It means that you have agreed to pay all taxes, etc on the property at the time you took delivery rather than at completion.

(Completion can only occur when the Title Deed to the property you've bought is available for transfer to your name.)

If you need a lawyer to take a look at your contract, I suggest you speak with one of the firms in Nicosia as you'll have a much better chance of getting independent advice. The British High Commission lists some of them on its website. See http://www.britishhighcommission.gov.uk ... 2220923764 for details.

If you would also like to visit my website (click on the WWW button below this message) and take a look through the 'Legal issues' pages - particularly the one about 'Immovable Property Tax'.

Regards,