Cyprus Property Transfer Fees – Latest Amendments
The ‘completion’ of a property transaction
According to Cyprus Law, a buyer of an estate in land (immovable property) is legally obliged to pay Property Transfer Fees when the ownership of the property is transferred under his/her name. Once the fees are paid a title deed for the property is issued and the buyer acquires the status of the registered legal owner of the property. It is worth noting, for bureaucracy reasons, that the payment of fees can be effected at the local District Land Office, where the property is located, either by cash or alternatively by a cheque. However, a buyer who chooses to pay transfer fees by the latter option i.e. by a cheque must bear in mind that the process is likely to be delayed as both the cheque and the paperwork concerning the issuing of Title Deeds will be sent to the District Land Office of Nicosia for approval.
Economic growth stimulation
It goes without saying that the property sector in any jurisdiction and more specifically property transactions are unduly and unnecessarily complex, time consuming and above all problematic. The Cypriot Parliament in a need for change and nevertheless under the need to stimulate economic growth in a sector that has been vigorously affected by the economic crisis took the initiatives and unanimously agreed to abolish or reduce Property Transfer Fees enhancing in this way the healthy and speedy operation of the District Land Offices.
Who are affected?
- There will be no transfer fees for those who pay VAT on their house purchase, and,
- Property transfer fees are to be reduced by ½ for those who do not pay VAT on their purchase.
Further, the same benefits are also enjoyed by those who submit applications under the provisions of the Town Planning Amnesty extending in this way the applicability of these amendments supporting the middle class and thus creating the potentials for economic growth
How the Property transfer fees are calculated?
The Land office has the authority to calculate the transfer fees on a property based primarily on the assessment of the market value of a property at its date of purchase. Transfer fees are calculated when the Land Office believes that the price of sale is not accordance to the market value. For example if somebody buys an estate in land for €100.000 and the Lands Office believes that its worth is €120.000 the buyer will be called to pay the transfer fees for the amount of €120.000.
The Lands Office’s valuation can be questioned and the buyer can pay the increased transfer fees under protest requesting the Lands Office to carry out a detailed valuation by inspecting the property in question. There is an indicative period of 45 days for objection. The applicant who objects must submit a valuation duly reasoned and authorized by a valuer. Additionally, if there is no agreement on the value the buyer can object to the Court.
This draft law will be effective for six months, until the Island’s Government submits a full proposal to the House and hopefully new measures will be effected in order to boost this sector and to enhance economic growth.
3.11.2011 Cyprus Lawyers N. Pirilides & Associates LLC