the need for an up to date valuation of properties in cyprus
DESCRIPTION
The need for an up to date Valuation of Properties in Cyprus . Speaker: Kyriakos Tsolakis Limassol District Lands Officer and Coordinator of Valuation and Management of State Land Branches www.dls.moi.gov.cy , [email protected] . TABLE OF CONTENTS. Introduction - PowerPoint PPT PresentationTRANSCRIPT
Conference and Plenary Meeting of the PCC in Cyprus
The need for an up to date Valuation of Properties in Cyprus
Speaker: Kyriakos TsolakisLimassol District Lands Officer and
Coordinator of Valuation and Management of State Land Branches
www.dls.moi.gov.cy, [email protected] [email protected]
29/11/2012 1
Conference and Plenary Meeting of the PCC in Cyprus
TABLE OF CONTENTS
29/11/2012 2
1. Introduction2. Purpose of General Valuation3. Historical background4. Major Provisions of General Valuation Law5. The CAMAS in the Valuation Section6. The Proposed Project7. Current issues and externalities8. Benefits to the Society
Conference and Plenary Meeting of the PCC in Cyprus
1. Introduction
3
Area:9,252 KMArea:9,252 KM22
Population: 877,800Population: 877,800
29/11/2012
Conference and Plenary Meeting of the PCC in Cyprus
Introduction (cont.)
4
MILESTONES OF THE CYPRUS REPUBLICMILESTONES OF THE CYPRUS REPUBLIC
1960 – Independent State1960 – Independent State1974 – Invasion and occupation of 36% of the territory 1974 – Invasion and occupation of 36% of the territory of Cyprus by Turkeyof Cyprus by Turkey
29/11/2012
Conference and Plenary Meeting of the PCC in Cyprus
Introduction (cont.)
5
1.5.2004 Member of the European Union1.5.2004 Member of the European Union
1.1.2008 Accession to EURO Currency1.1.2008 Accession to EURO Currency
29/11/2012
Conference and Plenary Meeting of the PCC in Cyprus
2. Purpose of General Valuation2. Purpose of General Valuation
6
THE BASIS FOR ALL PROPERTY TAXES IN CYPRUS
Immovable Property Tax Municipal Tax Communal Tax Sewage Tax Capital Gains Tax Grants and Benefits
29/11/2012
Conference and Plenary Meeting of the PCC in Cyprus
3. Historical Background
7
11stst General Valuation General Valuation • Initiated in 1909 after the introduction of the
Immovable Property Tax Law No. 12/1907
• The Law provided the General Surveys, Registration and Valuation in 20 yrs time
• Completed in 1929 with a Special Law No. 227/1926)
29/11/2012
Conference and Plenary Meeting of the PCC in Cyprus
Historical Background (cont.)
8
22ndnd General Valuation General Valuation – – Based on Based on 1.1.19801.1.1980
• Implemented and based on the Immovable Property (Tenure, Registration and Valuation) Law, Cap. 224, 1.9.1946
• Order issued by the Council of Ministers- P.I.N 2/1982
• Completed in 12 years
29/11/2012
Conference and Plenary Meeting of the PCC in Cyprus
4. Major Provisions of General Valuation Law
9
Immovable Property Law {S.2 (1)}
land
Buildings and other erections
Water rights
Undivided shares
Privileges
Liberties
Easements
Rights restricting the use
29/11/2012
Conference and Plenary Meeting of the PCC in Cyprus
Major Provisions of General Valuation (G.V) Law (cont.)
10
Part VII – General Valuation, Cap. 224Part VII – General Valuation, Cap. 224Section Section 66 – 66 – Valuation of Imm. PropertyValuation of Imm. Property • Valuation can be conducted when decided by the
Director or when requested by the registered owner• Determine provisional value for taxes and fees
purposes. The Director has the right to revise the value
• The valuer shall comply with the values situated in the same, neighboring or similar area
29/11/2012
Conference and Plenary Meeting of the PCC in Cyprus
Major Provisions of (G.V) Law (cont.)
11
Section Section 67 - 67 - RevaluationRevaluation After 5 years from the 1After 5 years from the 1stst Valuation, it can be conducted Valuation, it can be conducted a)a)When decided by the Director or through an When decided by the Director or through an
application of the registered ownerapplication of the registered ownerb)b)Revaluation can be conducted in less than 5 yrs if :Revaluation can be conducted in less than 5 yrs if : There is substantial reconstruction Erection of Building Demolition of Building that affects substantially the value of the propertyc)or a new G.V is Ordered under Section 69new G.V is Ordered under Section 69
29/11/2012
Conference and Plenary Meeting of the PCC in Cyprus
Major Provisions of (G.V) Law (cont.)
12
Section Section 68 - 68 - ValuersValuers (1)Valuation or Revaluation – conducted by valuers
who are appointed by the Council of Ministers(2) Shall take an Oath in Court
Section Section 69 - 69 - G.V of Imm. Property G.V of Imm. Property (1) The Council of Ministers may Order a G.V for the
purpose of securing up –to –date Uniform Valuations29/11/2012
Conference and Plenary Meeting of the PCC in Cyprus
13
Section Section 72 – 72 – Undivided Shares Undivided Shares a) Value is based on the whole share
b) Property can be valued through an application of any one or more co owners
c) Objections by one or more co owners d) The Director’s decision or the Court is decision for any co
owner, is applicable for the whole share
Major Provisions of (G.V) Law (cont.)
29/11/2012
Conference and Plenary Meeting of the PCC in Cyprus
Major Provisions of (G.V) Law (cont.)
14
Section 73 – – Valuation/Revaluation is valid until it is changed
Section 74 – – Written objection to the value of any property against the Director’s decision, indicates a fee of €17.
29/11/2012
Conference and Plenary Meeting of the PCC in Cyprus
The CAMAS in the Valuation Section
15
(i) Computer Integrated Land Information System
29/11/2012
Conference and Plenary Meeting of the PCC in Cyprus
16
The CAMAS in the Valuation SectionValuation Models
Direct Comparison Method Direct Rental comparison Method and Income
capitalization Land Models (residential, Commercial, Industrial,
undeveloped land, agricultural land) Unit Models (residential, tourist establishments,
schools, hospitals/clinics, livestock) Base Cost Models ( commercial, industrial)
29/11/2012
Conference and Plenary Meeting of the PCC in Cyprus
6. The Proposed G.V. Project
17
Medium Term Plan (2 - 4 years)Medium Term Plan (2 - 4 years)I. Property field data captureII. Data input into CAMASIII. Continues updating of dataIV. Mass Appraisal of propertiesV. Notification to the taxpayers and right of objection
through the DLS websiteVI. Interchange of data with all relevant central and local
authorities
29/11/2012
Conference and Plenary Meeting of the PCC in Cyprus
The Proposed G.V. Project (cont.)
18
Existing statistical data for data capture
Approx. 1.664.740 registrations, or 2.100.000 subproperties
Approx. 645.000 residential units, 100.000 commercial and tourist establishments units
Existing human resource is inadequate to implement this project
29/11/2012
Conference and Plenary Meeting of the PCC in Cyprus
The Proposed G.V. Project (cont.)
19
Data Capture Strategy
Methodologies: From internal and external sources of information of the Department and 3D aerial photography
Data capture of vacant land
(600.000)
Data capture of buildings(750.000)
The data capture of properties can be divided into two subprojects
29/11/2012
Conference and Plenary Meeting of the PCC in Cyprus
Field Data Capture using latest technologies
20
The Proposed G.V. Project (cont.)
29/11/2012
Conference and Plenary Meeting of the PCC in Cyprus
21
The Proposed G.V. Project (cont.)Required Resources for Data Capture
Temporary staff (400 persons), Cost € 12m Permanent staff for maintaining new buildings (40 persons), Annual cost € 700.000 Ancillary Costs: Rents, equipment, peripherals etc. €
2mRequired Resources for General Valuation
Permanent staff (60 persons), Cost € 8m Ancillary Costs: Rents, equipment, peripherals etc. € 2m
Time HorizonData Capture: 2 Yrs General Valuation: 2 Yrs
29/11/2012
Conference and Plenary Meeting of the PCC in Cyprus
The Proposed G.V. Project (cont.)
22
Cost/Benefit Analysis
Income versus Costs: Net Present Value €30m after the completion of the new General Valuation in 4 yrs timePayback period of loan 4yrs
29/11/2012
Conference and Plenary Meeting of the PCC in Cyprus
The Proposed G.V. Project (cont.)
23
• The project of General Valuation requires effective and The project of General Valuation requires effective and efficient management of resources to be successfulefficient management of resources to be successful
PlanningPlanning OrganizingOrganizing LeadingLeading Staffing Staffing ControllingControlling
29/11/2012
Conference and Plenary Meeting of the PCC in Cyprus
7. Current Issues and Externalities
24
The existing basis of property taxation on 1.1.1980 prices is out of date (32 yrs old)
It produces injustice between the citizens The current system is outdated compared with modern
best practices of advanced economies Inefficient and ineffective to support new kind of taxes
(e.g Development land tax, Environmental tax, Wealth tax, Grants and benefits)
Incapable of supporting decision making in central and local government finance and tax policy matters
29/11/2012
Conference and Plenary Meeting of the PCC in Cyprus
Current Issues and Externalities (cont.)
25
Incapable of supporting effective Land Policy and promoting transparency and efficiency in the Property Market
Tax Rates The tables below, display how property tax on 1.1.1980
prices has changed to increase revenue:
Scale of Property Taxon 1.1.1980 prices
Tax Rate
€1– €170.860 0‰
€170.861- €427.150 2,5‰
€427.151 – €854.300 3,5‰
€8543001 και άνω 4‰
Historical Scale of Property Tax
on 1.1.1980 pricesTax Rate
€1– €120.000 0‰
€120.000 – €170.000 4‰
€170.001 – €300.000 5‰
€300.000 – €500.000 6‰
€500.000 – €800.000 7‰
€800.001 =< 8‰
Expected Revenue 27,7 m
Existing (as at 1.1.2012) Scale of Property Tax
on 1.1.1980 pricesTax Rate
€1– €40.000 0‰
€40.001 - €120.000 3‰
€120.001 – €170.000 4‰
€170.001 - €300.000 9‰
€300.001 - €500.000 10‰
€500.001 - €800.000 11%
€800.001 =< 12%
Expected Revenue 56,7
Proposal
29/11/2012
Conference and Plenary Meeting of the PCC in Cyprus
8. Benefits to the Society
26
1. Budget Effects Increase revenue at Central and Local Level
2. Market Effects Improve information and minimise inefficiencies of the
Property Market Secure transparent and efficient investment property
markets Administrative tool in monitoring trends of the property
market, exposure to mortgage risks and overheated markets
29/11/2012
Conference and Plenary Meeting of the PCC in Cyprus
Benefits to the Society (cont.)
27
3. Fiscal Policies Assist government in planning and implementing fiscal
policies Assist government in implementing Property Indices
and Performance Measurements Assist in promoting new and effective Tax Policies.
4. Fairness and Equity Secure Uniform Tone of the Valuations and achieve
just and fair Property Tax for each citizen
29/11/2012
Conference and Plenary Meeting of the PCC in Cyprus
Benefits to the Society (cont.)
28
5. Administrative Effects Administration cost of property tax system can be
minimized The Property tax system can be simplified and made
more flexible to meet the needs of the changing environment
Achieving certainty of property tax payments by the taxpayers
29/11/2012
Conference and Plenary Meeting of the PCC in Cyprus
Thank you for Your Attention
2929/11/2012