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Cyprus Property - New Transfer Tax Rule Effective November 11th 2011

Posted on November 08, 2011

By: Nigel Howarth
Published: Thursday 3rd November 2011 •

EARLIER today the House of Representatives voted unanimously to abolish or reduce property transfer fees for a period of six months, according to a report in Stockwatch.

Cyprus New Transfer Tax Rule 2011

For those who pay VAT on their house purchase, no transfer fees will be payable.

For those who do not pay VAT on their purchase, property transfer fees are to be reduced by 50%.

The House also approved an amendment to the bill enabling those who submit applications under the provisions of the Town Planning Amnesty to enjoy the same benefit.

The draft law will be effective for six months, until the Island's Government submits a full proposal to the House.

Property Transfer Fees are based on the Land Registry's assessment of the market value of a property at its date of purchase. However, using its discretion to reassess the amount of Transfer Fees payable, the Land Registry relies on its own historical data in a way that cancels out any transfer tax benefit of a "bargain-buy", which can result in double the expected amount being levied.

There have been many reports of the Land Registry bumping up the perceived value of properties in order to extract higher Transfer Fees to help boost state coffers. This practice, which has been labelled "State Sponsored Fleecing" in the media, has done nothing to enhance the reputation of the Island.

The bill applies to cases where a contract of sale has been lodged at the Land Registry but for whatever reason a Title Deed is not issued within six months. It comes into immediate effect and is not retrospective.

 

Re-printed with the permission of Nigel Howarth

Comments:

Ashley

I bought a property in 2009 so the transfer tax will be due this year. Does this change mean I will still have to pay?

Andrew

Hi Ashley

Unfortunately you will have to pay your transfer fees as usual because the new law applies only to this six month period - November 2011 to May 2012. Basically, the government are trying to boost sales at this time a low sales.

Andrew - Admin

Suzy

My Husband (British) bought a house in 2005 and now they are telling him that he needs to pay for the title deeds. How much would that approximately be? is it percentage? or can he find a way to reduce the amount? I think they asked for Euro 14,000.
please advise We need more details to advise, including how much you paid for the property, when, and if it is new or a resale. Andrew Admin

A. Smith

We bought our villa in joint names for CYP74,000 in 2003. We had extras, marble staircase, shutters stone patio etc put in including a sunken 2.5 metre jaccuzi totalling CYP24,000. Will our title deeds fee be based on the CYP74,000 or the total of CYP98,000. Our builder says we will not need a solicitor for the transfer of our deeds but would you recommend that we have one. Also we were told by our builders that if we pay in cash we will be given our deeds there and then but if we pay by cheque it could take a further 2-4 months. We would appreciate your views on all this. Many thanks.

Andrew Admin

Dear A. Smith

We always recommend using a lawyer, no matter what and irrespective of who your builder is. When push comes to shove, the builder will always take care of themselves first, human nature. The value is based on the overall value of the property and lately, the land register have been upping the values in many cases and you can not really argue with them.
If you are in Cyprus, arrange to go with the builder to the land register and it is better to pay cash and finish the matter.
You pay this money only to the Land registry and not the builder.
Plus, if you are in Cyprus, go to the land regisrty by yourself and ask all the questions you wish. They are not busy these days so go along and ask away. If you have other questions, please let us know. Regards Andrew

A. Smith

Many thanks for for your answers to my questions. I quess a visit to the land Registry Office will be appropriate. Hopefully they will tell us how much the deeds will cost us. I think we will take your advice and have a lawyer there too.Thanks again Andrew.

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