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Discussion Starter · #1 ·
There is a very interesting article about the real estate market in Cyprus mail.

It cover different things but some is more interesting then others

For example it say that the trojka demands the pending Title Deeds shuold be not more then 2000 in the end of 2014. Must be a huge task to fulfill.

Trojka also demands that all property values should be revaluated to today's value. Is it really possible?

Trojka also demand a compulsory registration of contracts of sale within six month.

Much more in the article that can be read here

Chinese market under threat from real-estate cowboys | Cyprus Mail

Anders
 

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What a load of waffle reported on in that article. Why not give a clear statement of what the malpractices are?

For the backlog of title deeds to be reduced as required is a decent task that can be achieved if the Land Registry personnel can be convinced to do a full days work each day. This would be without any major revisions to the cumbersome and outdated working practices like composing, typing, printing and sending a letter to someone in an office just across the corridor who sits on it for 6 months before repeating the process with a reply.

Revaluing properties to current value is easily possible. The UK bases it's council tax on the nominal "rental value" of homes and this was revised en masse a few years ago by evaluating every house. If you can do it for a population of 63 million you can do it for a population of less than a million where a re-valuation is not necessary but a mathematical formula can be applied. A bigger question is how this is to be officially recorded and accessed. At the moment the value appears on the title deeds. It would be absurd to think of re-issuing all of these with an updated value.

The registration of sales contracts is an obvious, common sense requirement for any environment where taxes based on property are collected. This stipulation is probably to force registration of those properties that have been deliberately made transparent to IPT.

Pete
 
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Discussion Starter · #3 ·
What a load of waffle reported on in that article. Why not give a clear statement of what the malpractices are?

For the backlog of title deeds to be reduced as required is a decent task that can be achieved if the Land Registry personnel can be convinced to do a full days work each day. This would be without any major revisions to the cumbersome and outdated working practices like composing, typing, printing and sending a letter to someone in an office just across the corridor who sits on it for 6 months before repeating the process with a reply.

Revaluing properties to current value is easily possible. The UK bases it's council tax on the nominal "rental value" of homes and this was revised en masse a few years ago by evaluating every house. If you can do it for a population of 63 million you can do it for a population of less than a million where a re-valuation is not necessary but a mathematical formula can be applied. A bigger question is how this is to be officially recorded and accessed. At the moment the value appears on the title deeds. It would be absurd to think of re-issuing all of these with an updated value.

The registration of sales contracts is an obvious, common sense requirement for any environment where taxes based on property are collected. This stipulation is probably to force registration of those properties that have been deliberately made transparent to IPT.

Pete
So you mean the reevaluating is a simple process of setting the new value calculated on General Index. Meaning that the 1980 Value should be multiplied with about 3,5 today? I really cant believe that. And what with the value if the house is now expanded in size, or have luxury kitchen, or a pool?

In Sweden every property is re-valuated every 5 year based on a very complex form filled in by the owner. I doubt it would be possible here, and open for a lot of fraud.

Anders
 

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I am indeed suggesting that simple process.

If the house is expanded or has a pool added, planning permission should have been sought and related to the deeds. A luxury kitchen should have nothing to do with it. The UK's revaluation is fraught with many issues including small areas with unusual increases in value through redevelopment or simply becoming trendy. Thus it has to be looked at case by case. In Cyprus this is not so and therefore a formula could be applied. There might be injustices which could be considered individually.

Even if a property by property evaluation was decided on it would be perfectly possible in a similar process to the way census data was collected by people calling house to house a while ago.

Much of this hinges on the Land Registry doing the job that it has failed to do for so long.

It is simply not good enough to say it can't happen here because this is Cyprus. The message should be clear by now, Cyprus HAS to change. Fraud exists everywhere, what is needed is to keep it to a manageable and non-significant level.

Pete
 
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Discussion Starter · #5 ·
I am indeed suggesting that simple process.

If the house is expanded or has a pool added, planning permission should have been sought and related to the deeds. A luxury kitchen should have nothing to do with it. The UK's revaluation is fraught with many issues including small areas with unusual increases in value through redevelopment or simply becoming trendy. Thus it has to be looked at case by case. In Cyprus this is not so and therefore a formula could be applied. There might be injustices which could be considered individually.

Even if a property by property evaluation was decided on it would be perfectly possible in a similar process to the way census data was collected by people calling house to house a while ago.

Much of this hinges on the Land Registry doing the job that it has failed to do for so long.

It is simply not good enough to say it can't happen here because this is Cyprus. The message should be clear by now, Cyprus HAS to change. Fraud exists everywhere, what is needed is to keep it to a manageable and non-significant level.

Pete
Sorry but I just cant see the reason for a re-valuation like that. Of course if the state decide to keep the IPT as it is today, the tax will increase with 350 % but I doubt that is the purpose. Because if so the number of properties for sale will be increased 50%

Anders
 

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Sorry but I just cant see the reason for a re-valuation like that. Of course if the state decide to keep the IPT as it is today, the tax will increase with 350 % but I doubt that is the purpose. Because if so the number of properties for sale will be increased 50%

Anders
I don't understand your reply. The reason for the revaluation is the demand of the Troika as you stated. I was merely suggesting a valid but simple methodology to achieve the process which you doubted. I'm not sure where you get your 350% from but it seems obvious to me that the IPT tax rates would alter accordingly. I also don't understand why you think the number of properties for sale would increase by 50%. Where does that figure come from? 50% of what? Current properties on sale?

Pete
 
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Discussion Starter · #7 ·
I don't understand your reply. The reason for the revaluation is the demand of the Troika as you stated. I was merely suggesting a valid but simple methodology to achieve the process which you doubted. I'm not sure where you get your 350% from but it seems obvious to me that the IPT tax rates would alter accordingly. I also don't understand why you think the number of properties for sale would increase by 50%. Where does that figure come from? 50% of what? Current properties on sale?

Pete
It was a little ironic. If they keep the tax rates, the tax will probably increase more then 3,5 times(difference in index 1980-2013) and the properties for sale increase because people cant pay the tax.

But I still can't see the value of this operation, because in the end the result will be the same. Trojka demand or not. State will gain nothing, but must pay the cost

Anders
 

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It was a little ironic. If they keep the tax rates, the tax will probably increase more then 3,5 times(difference in index 1980-2013) and the properties for sale increase because people cant pay the tax.

But I still can't see the value of this operation, because in the end the result will be the same. Trojka demand or not. State will gain nothing, but must pay the cost

Anders
The value of the operation would be the same as for Cyprus as Sweden or the UK, they do it, don't they? I guess it's a bit like valuing your assets correctly in business. It would also enable correct revaluing if people have expanded their houses.

There would in reality, be little change to properties on sale as those that are most likely to not be able to pay the tax would be hard-up Cypriots who would not sell the home they are living in.

In practical terms it should be way down the list. There are far more important changes and improvements to be made.

Pete
 

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Evaluating the property at any point in time is fraut and dependent upon the government valuer, because the value on the deeds doesn't declare what sum was "passed under the table" to minimise CGT or other reason agreed between buyer and seller. Then, revaluing the property to an earlier or later date is a matter of applying an indexation (compounded) based upon historical inflation numbers, year on year. This should be well established, as CGT on property and land sales (the only CGT in Cyprus) should discount for the element of inflation (or do the ever suffering Cypriots get "inflation tax" as well?)
 

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Evaluating the property at any point in time is fraut and dependent upon the government valuer, because the value on the deeds doesn't declare what sum was "passed under the table" to minimise CGT or other reason agreed between buyer and seller. Then, revaluing the property to an earlier or later date is a matter of applying an indexation (compounded) based upon historical inflation numbers, year on year. This should be well established, as CGT on property and land sales (the only CGT in Cyprus) should discount for the element of inflation (or do the ever suffering Cypriots get "inflation tax" as well?)
The value on the deeds does not reflect the purchase price at all and that's the same for the valuations in the UK. This nominal value should not be confused with the actual price of the house which is what it's worth to a buyer at a moment in time.

I am sure that every government adjusts their various tax levels to account for inflation otherwise government income would drop in real terms. VAT is of course an obvious exception as it has inflation built into it.

Pete
 
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Discussion Starter · #11 ·
The value of the operation would be the same as for Cyprus as Sweden or the UK, they do it, don't they? I guess it's a bit like valuing your assets correctly in business. It would also enable correct revaluing if people have expanded their houses.

There would in reality, be little change to properties on sale as those that are most likely to not be able to pay the tax would be hard-up Cypriots who would not sell the home they are living in.

In practical terms it should be way down the list. There are far more important changes and improvements to be made.

Pete
In Sweden houses are revaluated every 5 years to be able to tax them correct. And to get a value to set the possible mortgage( 80% of the set value in total)


You are very right, there must be more important things, and Title Deeds must be high up on that list

Anders
 
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