Immovable Property Tax Law In Cyprus
Under the Cyprus “Immovable Property Tax Laws 1980 – 2019”, all property owners, regardless of whether they are Cyprus residents or not, are liable to pay an annual tax based on the total value of all the immovable property registered under their name.
Cyprus property tax is calculated on the market value of the property, as of 1st January 1980, and must be paid annually to the Inland Revenue Department.
Immovable property tax is imposed in accordance with the Immovable Property Tax Law 1980 Νο 24/1980.
Every registered owner whose immovable property value exceeds €120,000 is required to submit a declaration of Immovable Property (IR301 and IR302) and must pay the respective tax every year, before the end of September.
Due to delays in issuing Title Deeds, some developers are the registered owners of land banks and properties, whose value is many millions of EUROS.
According to the law, it is the “registered owner” who is obliged to submit annual declarations of their immovable property to the authorities and pay the Immovable Property Tax, plus any penalties imposed due to late payment. For that reason and until Title Deeds are issued, buyers pay Property Transfer fees to secure ownership of the property they have purchased, which will then be registered under their names.
However, in their Contract of Sales, developers often include a clause making buyers liable to Immovable Property Tax when they deliver property and ask buyers to pay their contribution.
Some developers attempt to charge buyers outrageous sums of money based on the purchase price of the property and some will even add the penalties they been charged by the tax authorities for late payment.
Before paying any Immovable Property Tax demanded by a developer, buyers must ask the developers to provide written evidence of the amount of Immovable Property Tax that has been paid to the Inland Revenue for the land on which the property is constructed and the buyers’ share of that land. (e.g. if the development has been constructed on 10,000m² of land, and the buyer’s plot measures 500m², then the buyer should only pay 1/2 of 5% of the tax bill).
Reclaiming Immovable Property Tax From The Inland Revenue
Once buyers receive their Title Deed, they may apply to the Inland Revenue (form IR314), to reclaim any overpayment of Immovable Property Tax paid by the developer on their behalf.
Buyers should take the completed form together with the below documents:
- Copy of the Property Title Deed
- Receipt issued by the Land Registry when the Contract of Sale / Sale Agreement was deposited for specific performance
- Copy of the Contract of Sale / Sale of Agreement
- Receipt(s) issued by the property developer confirming the Immovable Property Tax paid to their local Inland Revenue Office