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Property tax incentive extended

Designed to stimulate growth in the island’s beleaguered property market, tax incentives introduced in December 2011 for those purchasing new homes may now be extended until the end of 2013.

CHANGES to Cyprus’ Property Transfer Fees, which came into effect in December 2011 for a period of six months and subsequently extended for a further period of six months, may now been extended until the 31st December 2013.

The incentives only apply to the first sale of a property, where the contract is dated and deposited at the Land Registry by the end of 2013. Specifically:

  • For those who pay VAT on their house purchase, Property Transfer Fees are waived.
  • For those who do not pay VAT on their purchase, Property Transfer Fees are reduced by 50%.

Property Transfer Fees become payable at the legal completion of a sale and enable the ownership of a property to be transferred from the vendor to the purchaser by the Land Registry.

These tax incentives are designed to boost property sales and stimulate growth in the Cyprus property market by reducing the cost of home ownership.

Further reading

Property Transfer Fees law changes (Greek)

Notes

The incentives do not apply to sale agreements dated prior to 2 December 2011.

The incentives apply regardless of the when the Title Deeds are issued and ownership is transferred to the buyer – be it 5, 10 or 20 years in the future, providing the contract of sale is signed, dated and deposited at the Land Registry before 31st December 2013.

There are provisions in the law that prevent its abuse, for example, by buyers withdrawing contracts of sale deposited at the Land Registry for Specific Performance, changing their dates and then re-depositing them.

Readers' comments

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  • @Curmudgen – unfortunately many people under declare the price they paid for their property and the Land Registry system of valuing properties is designed to combat tax evasion.

    If you look at the statistics, the ‘accepted’ sales price (the land registry valuations) are around 7.5% higher that the ‘declared’ sales price (the price entered on the contract).

    We have published many articles about this problem and how best to deal with it if the Land Registry attempts to overcharge.

    As for changes to the Specific Performance law, I understand changes are being discussed concerning assignment/vesting contracts that were introduced last year.

    As soon as I have any reliable information, I’ll publish.

  • Curmudgen says:

    On one hand The Land Registry is fraudulently squeezing more money from those who have already bought when they finally issue their deeds and on the other hand, the government is giving it away to those about to buy!

    Can’t wait for the next amendment to the Specific Performance law. I dare not print what I think it will be just in case some sneaky government minister or land registry crook reads these columns for ideas.

  • Mike says:

    STEVE – Agreed, I too think we will ignore any proposals but to be fair I don’t blame the government for trying to demand it’s own conditions as laughable and incomprehensible as that may be. If you don’t ask you don’t get. We must not forget that these people were “negotiating with”, okay fooling, invaders for thousands of years while North Europeans were still living in caves so are well versed in ‘artful’ ways.

    DAVID WRIGHT – Please remember there are thousands of individuals in the market to buy who do not need mortgages but will not buy in Cyprus due to the toxic nature of the process as has been identified. Sorry to hear of your predicament. I guess the longer it goes on the more dilapidated units become in this environment. It is a pity that planning permits, such as they are, do not include the demand to keep developments clean, tidy and well maintained until sold.

  • David Wright says:

    This isn’t going to help. No-one is buying property because the banks do not have the money to give them mortgages.

    And there is still the ‘elephant in the room’ (title deeds). I cannot get mine because my developer has a mortgage on the land and nobody has bought on my development for two years. Many of the empty houses need work doing on them as they are very scruffy. Nobody is going to buy them in the state they are in even with this tax incentive.

  • Frank says:

    @Ttooulos.

    Many purchasers in Cyprus would appreciate it if the developers actually gave a “1 for the price of 1” deal: never mind “2 for the price of 1”.

    Instead, the developers take the “price of 1”, in full, from the buyer but retain legal ownership by failing to provide the Title Deed: often using that ownership as collateral for their own loans. Also, the paid-for property legally remains an asset of the developer; which could be liable to seizure if the developer defaults on loans, taxes, luxury car payments, etc.

    The property is not the buyer’s asset but the buyer’s financial liability. The payment for the property, however, becomes the developer’s asset at the exact second of purchase.

    Indeed, many who have parted with their money to a Cypriot developer would truly welcome a “1 for 1” deal.

  • Steve says:

    @Mike When you look at the laughable response to the Troika’s proposals, it is a reminder that these people do not think the way that most Europeans do and certainly not the way the British do, so it is very hard for us to understand and accept how this country is run. I fully expect that when the agreement on austerity measures is complete, Cyprus will try to ignore it and carry on just the way they were, basically as they have with the property issues.

  • Mike says:

    Increase VAT, lower transfer tax, increase fuel Duty ….and so it goes on.

    When will the administration put the smoke and mirrors away and at least make some credible and meaningful attempt to address the root cause of the problem? Can they not see that all the proposals amendments to existing legislation introduced over the last 3 or so years has had no real impact due in the main to a fundamental mistrust of existing legislation and the absence of the rule of law.

    Fix it and prosper or retain it and suffer the consequences.

  • Ttooulos says:

    The only incentive that may be somewhat effective is if the developers offer a “2 for the price of 1” kind of deal.

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