Cypriot property tax scam exposed

News on Cyprus

A developer in Cyprus has allegedly charged expatriate homebuyers sky-high Immovable Property Tax (IPT) charges.

The group of Paphos purchasers checked with the authorities how much they should pay in IPT, only to discover that their developer was charging them each 500 times too much annually.

According to the website of the Inland Revenue Department, IPT is imposed on the value of the property as it stood on January 1, 1980. Property worth less than €171,000 (around £133,000) on that date is exempt from IPT. The rate of charges on the 1980 values in excess of this amount are calculated on a sliding scale from 2.5% to 4.0%, depending on how much the land was valued in 1980 over and above the €171,000.

However, according to the Cyprus Property Action Group (CPAG), unscrupulous developers have for years been charging homeowners without title deeds huge percentages on the current value of their houses rather than on 1980 values of the total development, while only paying the state the real amounts.

CPAG spokesman Denis O’ Hare says that it is not always easy for people to find the correct information with government departments.

"On researching the facts with the Land Registry and the Inland Revenue Department, the residents’ association discovered that the developer was charging the buyers, on average, 500 times too much! The developers falsely assure buyers that this is what they actually pay to the government on behalf of the buyers."

In January this year, CPAG submitted a report to the government on the IPT issue.

"We described this IPT crime with full supporting legal opinion," says O’Hare. "Since that time, however, the government have not refuted anything in our report nor have they had the courtesy formally to respond."

CPAG considers the illegal IPT practice by developers as obtaining money under false pretences, which they say is a crime under Criminal Code 298 and punishable by five years’ imprisonment.

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Information provided by Homes Overseas | © PropertyIndex.com 2008 | Last Updated: 15 October 2008