TAX PLAN FOR GC PROPERTY
PEOPLE who acquired property left behind by Greek Cypriots in 1974 could be hit with a 15 per cent tax bill under moves proposed by the head of the Immovable Property Commission (IPC).
Ayfer Said Erkmen called on the government to introduce a type of Capital Gains Tax to help pay off mounting compensation claims submitted to the IPC from former Greek Cypriot owners.
Latest figures show that the IPC has paid out almost £270 million since 2006 although the amount relates to less than a fifth of the 6,413 applications that have been lodged with it to date. The pace of payouts has slowed in recent years because of funding issues, although new applications are on the up again following the collapse of peace talks at the Swiss resort of Crans-Montana last summer.
Under the proposal, a person holding an “eşdeğer” (exchange) title deed — issued for equivalent land and property abandoned by Turkish Cypriots in the South — would be forced to stump up the cash to help pay for future compensation settlements.
Homeowners would be able to take out a
special loan to pay the tax, Mr Erkmen said, adding that they would then benefit from a subsequent rise in the value of their property, which he said would become “legalised” in the eyes of the European Court of Human Rights (ECHR).
“Whether this tax is charged on an annual basis or . . . at the point of sale, is one issue that needs to be talked about,” Mr Erkmen said.
“However buyers need to understand that there is talk behind the scenes of introducing a ‘special purpose vehicle’ company, backed by banks, which would offer lowinterest mortgages for the payment of this tax.
“Once the [former] Greek Cypriot [owner] is compensated, the value of the property would appreciate by two to three times its current value instantly.”
Mr Erkmen said he had managed to talk the Turkish authorities — which effectively bankroll the IPC — out of introducing a whopping 60 per cent levy.
He said funding from the TRNC government of around 75 million TL a year — roughly £14 million based on the current exchange rates — was not enough to settle the thousands of outstanding claims.
“What is now needed, is for this government to show determination and discuss this issue with a view to enacting a law on this,” Mr Erkmen continued. He said that a total of 21 new applications had been made to the IPC in the first two months of 2018 and that 2017 saw 87 more applications compared to the previous year.
“During the Crans-Montana period, new applications came to a halt,” Mr Erkmen said. “[Since then], the number of applications has increased once again. Greek Cypriot property applicants who see no hope for a settlement are resorting to the IPC.”