For those who have appealed to us to come up with our own ideas on how to react on the declared Governmental proposal on the property tax situation, we wish to state that by the end of the month our own comprehensive proposals regarding this matter will be submitted to the Government.

Our proposals bear in mind the urgency by the Government to collect €500 mil. within the next 3 years (not only from real estate taxation) but at the same time to take into account the negative affects of such a proposal, both for the developers, property owners and the much needed new buyers/investors in real estate. Our proposals aim to encourage real estate investment and thus help towards a revival, of some sort, of the industry, the agony of the lower income groups wishing to acquire a home, the unfair wealth acquired by land owners created by Governmental decisions, the taxing of speculators on development land, the reduction of the tax-evasion and a more transparent taxation, the offering of tax discounts in most occasions, bearing in mind foreign buyers/investment and all these bearing in mind a minimal administration cost (civil service) and of course added Government income. Can this be done? – We tried. A give and take situation, which, we hope, it will address all potential parameters. We will not publish now our full study/proposals prior to a Governmental reaction, but we can submit now the outline of our proposals. We aim to publish our final study by the end of this month/mid February 2010.

Property Tax on 1.1.80
The existing system to remain as is, but updated through the use of self declared property ownership. Based on valuation bands, this proposal of ours, can be placed in practice within 6 months, taxing all those property owners who did not declare their developed properties, stating that they are undeveloped (as land only).

Transfer fees
Our proposal is for a 30% discount on all transfer fees, if buyers accept transfers within the next 2 years. Even property without titles can pre-pay their transfer fees and thus gain the discount.

V.A.T. 15%
Payment of only 5% from start if one’s main residence (and not 15%, less 10% discount after 3-4 years). Property sales prices will diminish cost of purchase and thus encourage buyers. Special proviso for foreign buyers.

Vacant Development Land
Subject to large exceptions vacant development land to be taxed at a much higher rate (5%) as at 1.1.80 values.

Public Interest Projects
Special low tax provisions for projects of a long term nature and for which are of a public interest (e.g. golf, marinas etc).

Property Tax as at 1.1.80 - Buyers
A proposal is suggested for the vexed problem of this tax for property which is completed, but the tax is unknown. Self declaration of buyers at the time of buying and exceptions as from the start. This will go a long way to solve this long outstanding problem.

New Zones
Governmental decisions which increase properties values (e.g. extension of a development zone into agricultural areas) will bear a tax of 20% on the value difference. The tax to be deducted from the capital gains when sold/developed. This will also reduce corruption to a large extent and encourage better planning.

Capital Gains - Basis
Change in the law so that sales prices in terms of capital gains are not accepted as declared (now they are mostly underdeclared) but based on market value. The existing system is wide open to abuse.

Capital Gains - Discount
For a period of 2 years, the 20% capital gains tax to be reduced to 10%. This in order to encourage the market towards revitalization. Less income but more sales and thus Governmental income not necessarily reduced.

Simple Procedures
The adoption of simple easily to understand procedures by the public, addressing the public feeling of a fair and equal treatment.

Administration Cost - Civil Service
The basis is self tax, but for those who declare fasly, they will be liable to penalties plus interest at 9% p.a. etc.

Keeping land prices at reasonable levels
A relation between demand and supply is attempted. At present with the existing development zones, which can accommodate 4 mil. people, does not justify such high land prices for the 1/5 of the above number of population. Methodology suggested.

Wealthy “Homes” - Wasted developed land
Special provisions for a more reasonable charge based on the 1.1.80 values (and with exceptions), but more reasonable when small buildings are developed in large plots of development land.

Developers’ Land Back
Measures suggested for development land more accessible to developers and others/investors etc, so that they will reduce their need to have a large land bank for years ahead of need and thus passing on the cost to buyers.

We feel that what we are submitting is a fair redistribution of property taxation charging more those who do not need development land but holding it back for own gain, encouraging development and purchase/investment by others etc.

Wait for it.

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