March 5 2019
It appears that there is an increasing rate of title issue and this without the affects of the Building Amnesty.
Be it with some years delay (approximately 4-7 years after completion) titles are being issued. This positive development has brought up at an increasing rate some problems that are related to the transfer of property.
These are calculated on a scale as follows:
0 - €85.430
€85.431 - €170.860
€170.861 and over
Discount on transfer fees:
Transfer fees paid on the transfer of property to a family company are refunded in five years provided the company still owns the property and there have not been any changes to its shareholders.
On the transfer of immovable property from a family company to its shareholders as well as on transfer by donation between spouses, spouses and children or relatives up to third degree of kindred, transfer fees are calculated on the estimated value of property as at the 1/1/2013 and at the following rates:
Parent to children
Between 3rd degree relatives
The actual cost refers to very little transfer fees around €100.
Transfers of immovable property by a company to another company for the purpose of a company re-organization are exempt from transfer fees.
The date of the valuation is taken as being the date of sale/acquisition. As such if one bought a property in the year 2002 and transfers the property now, the transfer fees will be based on the market value on the date of the acquisition i.e. 2002.
The law stipulates that the Lands Office must ascertain the value of the property on the relevant (sales) date, based on the market value on the date of sale. Usually the Lands Office accepts the actual sales price, but approximately 20% of the total is disputed by the Lands Office if it can ascertain from its own records that the market value at the time is different (usually it charges higher values and never lower!!). The main method adopted in order to ascertain the market value is the comparable one (there are others also). So if you bought an apartment for say €100.000 and the Lands Office has in the records other sales for €120.000 for similar properties, it will charge you fees on the €120.000.
Regrettably a good percentage of locals and others under-declare their sales/acquisition price for the purpose of saving capital gains (by the seller) and transfer fees (by the buyer) and this is widely known – hence the Lands Office stand.
You are not in a situation of take it or leave it, but if one disagrees with the Lands Office valuation, you can apply to the High Court supporting your claim using a private valuer’s report. This must be done within approximately 40 days from the date that the Lands Office makes its final/determination assessment. What is infuriating in such cases is that even upon determination/final valuation, the Lands Office does not provide the affected parties with a written report supporting its own assessment, whereas the buyer must do so in writing etc, in order for the Lands Office to re-examine.
On the other hand we have the odd situation of a project of 9 houses of similar extent etc, bought by myself (A.L.), an ex-minister of Finance, on ex-mayor of Nicosia etc, at the average sales price of €260.000 we were charged with €300.000. In another project of 33 apartments with an average sales price of €100.000/each, the buyers were charged €130.000/each. The buyers want to object but then the cost element to go to Court, legal and valuation fees would amount to the same. So under this “blackmail” approach most buyers accept this. Is this correct however?
Date of Assessment
If a contract is deposited with the Lands Office, then the date of sale so recorded in the contract is the one adopted. If the contract is not deposited, you must produce your contract as well as the receipt of the down payment, so that the Lands Office can ascertain the sales date.
The Economic Situation + Transfer
After all the uphill battle to secure the deeds, it has now been ascertain that only 20% of the title deeds issued are actually transferred and this because nowadays where every cent counts, people are not willing to come up with (say) €15.000-€30.000 transfer fees since they feel that the fees are fixed on a certain date and since no interest is charged and provided you have no immediate use of the title this may be a solution, be it temporary.
We hope that we have cleared the situation since from the various letters that we receive, it seems that there is some confusion.We are at a loss dear readers what are the new VAT provisions all about. We have read the law over and over again and we have attended one lecture on the subject given by one of the international auditors, but we still cannot profess that we understand fully the provisions. What we are somewhat clear about (not 100%) and a subject which may be of particular interest to foreign residents regarding rentals and land purchase is as follows:
Even those consultants who gave us the lecture did not fully understand as they have no answers to all the questions and it will take a while say a period of at least 6-8 months to clear the situation. The VAT authority says for any enquiry should be addressed to it for clarification. Bearing in mind that the Governmental Departments do not answer within the same day, but more likely 2-3 months, so what happens in the meantime? Will the seller hold back the property until the authorities decide? If then there is a sales contract and no VAT is charged what will the situation be if the VAT authority decides afterwards that the 19% should be charged?
Nobody knows at the end dear readers what is happening and the situation is not clear also regarding agricultural land with the only clear exemption for certain categories (agricultural zones, Natura areas etc).
We will come back to you as added information is received.