Landowners, property developers and hoteliers have come out in objection of the tax hike, which is based on 1980 values. While the consumer price index will be applied to property prices to make them more reflective of current times and tax rates for the value bands will be adjusted, they maintain the bill is unconstitutional and will drive the economy into deeper recession.
For those considering buying immovable real estate in Cyprus, they will have to take the value of property in 1980 and times that number by 3.5. The first €150,000 (£121,855) is tax-free, but after this cut off point, a coefficient of €150,001 to €500,000 (£406,184) will be taxed €6 (£4.8) per thousand, a €500,001- €1,000,000 (£812,368) coefficient of €8 (£6.50) per thousand, €1,000,001 and above coefficient of €10 (£8.12) per thousand.
Data from the Inland Revenue department revealed that 44,000 people will now have to pay IPT under the new regime and the state is expected to collect an additional €18.9 million (£15.3 million) from 1,450 people whose property is worth over €1 million (£812,000 approx).
Averof Neophytou, DISY deputy chairman, is among those asking the government to find an alternative solution, claiming the tax will hit middle income families. "If there is a will, we can find fairer solutions,” he said. "A middle class family who owned property worth €300,000 (£243,710) by 1980 prices paid €375 (£304.64) up until 2011; today they would have to pay €6,450 (£523,09). We are talking about 17 times more taxes."
However, with property prices reaching an all time low in Cyprus, those considering investing in real estate in the country still have plenty of stock to choose from which won't fall under the tax. The Global Property Guide reported that at the end of 2011, house prices in the country had fallen to 14.5 per cent below their Q3 2008 peak, according to the Central Bank of Cyprus.