Bills withdrawal for real estate tax after the reactions of Cyprus association of Estate Agent Entrepreneurs

  Article By : Marinos Kineyirou|  Published at : Politis Newspaper| 23-12-2012

Marinos Kineyirou: Vice-president of the Cyprus Association of Estate Agent Entrepreneurs, President of the Real Estate Agent Entrepreneurs Association of Larnaca- Famagusta and Property Auctioneer

Marinos Kineyirou Manager of Marinos Estate Agencies LTD

Marinos Kineyirou Manager of Marinos Kineyirou Estate Agencies LTD


On December 10th the Cyprus Association of Estate Agent Entrepreneurs attended the session of the parliamentary Finance and Budget Committee and gave its views on the amending law for the taxation of real estates.

The Association requested the review of the taxation of real estates by the withdrawal of the bill for the property tax due to wrong calculations and estimations. The risk of businesses closing has caused much concern due to miscalculations in the amounts to be paid by companies and the fact that many realtors do not have title deeds or even a large portion of the population has property without getting any income. The bill that the government sent to the parliament was a draft and socially unjust without serious consideration and had ambiguities as to the criteria by which citizens will pay the new taxes. The representative of the Inland Revenue Department had completely different positions from that of the association, stressing that due to the economic crisis from the 200 million and above it is estimated that only 69 million will enter the state fund because most of people will not pay. The strong reaction of the Cyprus Association of Estate Agent Entrepreneurs and other business groups that deal with real estates, forced the government to withdraw the bill for the property tax due to wrong estimations and calculations for the amount paid by companies and properties.

All the suggestions made by stakeholders are set in the Ministry of Finance. With the law on property taxation, the tax on real estates exceeds 200 million which the government asks while Troika wants only 69 million.

The Association stresses that the right solution for the taxation of real estates is the comprehensive tax reformation and not taxations from ambiguous state services such as waste collection, sewerage, property tax, real estate tax and others, while increasing the property tax will reduce sales prices of real estates but will also burden every Cypriot owner. The real estate property should not be used to cover the financial needs of the state with no one taking into account that the impact will be great for the real estate companies which already face huge problems. High taxes will force property owners to sell-which will lead to a reduction in prices. The price adjustment of 1980 with an increase of the values for ​​3, 5 and the proposed new scales will create huge liabilities for each owner. This bill enables evasion since many owners will transfer their property to their family to reduce taxation. The Association emphasizes that the taxation of each property should be treated separately and not per person so that no cases of tax evasion occur. With this proposal owners with property of great value will pay more and there will be no way of evasion transferring their property to relatives or even creating companies to avoid taxation. The proposed Memorandum endangers the property market and embarrasses one of the most fundamental pillars of the economy. The bill for the taxation of real estates is far worse and unfair, surpassing the suggestions of the Troika. Only when they are able to calculate the true value of real estates it will become fair and targeted.

Based on the amending law, taxation is 8.5 times greater than the hitherto existing laws and the state is not ready to impose any such taxation due to non-registration of all real estates. Based on estimations of 1980, plots are still registered in the land registry with no evidence for the buildings erected on them. For example, having two plots of the same value which have two identical houses built, and if the one owner has registered the property while the other not, the taxation for the first will be much greater and unfair compared to the second owner whose tax will be only for the land’s value.

The Association suggested to the Parliamentary Finance and Budget Committee the change of the taxation rates with taxable limit beyond 150 thousand euro and agreed to review the bill on the taxation of real estates.

Concerns raised by the Association show the wrong estimations made by the Ministry of Finance and asks once again to hear their suggestions and take the right measures before the prospects of the real estate sector are at a higher risk.

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