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Property owners in Cyprus facing higher property taxes

Under the bailout terms agreed with the European Union and the International Monetary Fund the Land Registry must catch up with the massive backlog of title deeds.

The backlog dates back decades and the whole system has been mired in controversy as unscrupulous developers failed to give owners their deeds and sold them on to lenders so they could raise money for their next project.

It has resulted in tens of thousands of people not officially owning their properties and although the Cypriot government has promised to sort out the situation progress has been slow.

Now as part of the bailout terms some 60,000 title deeds must be issued in the next 18 months. Staff at the Land Registry have been issuing around a 1,000 title deeds a month but they are being told to step up the output. They will need to produce at least 3,000 a month to meet the deadline.

A Land Registry spokesman said that staff have volunteered to work on Saturdays to work towards meeting the target. If they fail then the bailout deal could be in jeopardy.

They are also having to re-evaluate properties so that a new Immovable Property Tax can be properly applied. The annual property tax will still be based on the value of a property on the 01 January 1980 but many owners never paid any as their property was not registered and that is now having to be rectified.

The Land Registry said that these tasks are taking priority and any other work, such as the sale of property, is likely to be slow. It means that anyone buying a property could face a hefty wait for the land registry documents to come through.
MPs have voted through the new tax which will see every owner paying a minimum of €75 with increments rising according to the value of the property.

Another problem relates to building permits. It is estimated that in some places such as Limassol, Nicosia, and Larnaca houses worth millions of euros have been built which do not have building permits. At the moment, these are registered as building plots or agricultural land.

The new bill also penalises registered owners of property who fail to pay their Immovable Property Tax by the end of September each year. Originally the penalty was set at 20% on the tax due but this has now been reduced to 10% with a 10% reduction if the tax owed is paid 30 days or more before the deadline.

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