YESTERDAY, the House of Representatives passed a number of tax incentives designed to boost business activity and attract foreign investment to Cyprus.
Changes to the income tax laws concerning the 5% VAT payable on new homes have been expanded to include non-EU citizens.
Changes to Property Transfer Fees, which came into effect last December for a period of six months, have now been extended until the 31st December 2012.
The changes only apply to the first sale of a property, where the contract is dated and deposited at the Land Registry by the end of the year. 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.
The tax incentives are designed to boost property sales by reducing the cost of home ownership and stimulate growth in the Cyprus property market.
Thanks Nigel.
Obviously another policy that will have no impact. New buyers should by now be well informed thanks to sites like this and the Internet generally.
Why do they bother? Are they paid to turn up and dream up useless policies that will help very few, if any, and raise cash? No answers required.
@andyp – see the earlier report Transfer fee abolition/reduction law published at last!
Nigel. I assume there is a date before which registered contracts are excluded from this reduction or is there?
@Steve – 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.
@Nigel
From what you say in your further explanation, I am tempted to conclude that anyone purchasing a property currently without title deeds, who swaps the old sale and purchase agreement in the land registry files for a new one, dated before 31 December, would qualify for the waiver or reduction. Seems unnecessarily generous to me.
@Martyn – I think you may be confusing ambition with ability.
A couple of other stories that demonstrate the ridiculousness of the present system.
Story 1 – Plot of land surveyed by Land Registry using ‘old’ technology theodolite.
Planning and building permits applied for and issued. House built in accordance with those permits.
Subsequent survey also carried out by the Land Registry using ‘new’ technology theodolite employing GPS shows that part of the boundary wall has been built outside the boundary – so process on issuing deed halted.
Legal action is being taken by the government against landowner for encroachment onto their land.
Story 2 – Planning and building permits issued for the construction of a house.
Local authority wants 3 metres from the front of the plot for road improvement and asks landowner if this is OK – he says yes.
Local authority asks if it would be possible to move the house back 3 metres – landowner agrees.
House built in accordance with permits issued for its construction.
When the completed house is inspected by the same local authority, it is found to be overbuilt for the plot size. So local authority rescinds permits.
Home owner now applying under the Town Planning Amnesty.
And you want Land Registry to issue Title Deeds in 30 days?
The whole system is a complete and utter disaster! Tinkering around at the edges will not cure the problem – as someone once said “you cannot polish dog poo”.
@Mike – Maybe I should have given a further explanation.
The 50% reduction or waiver applies 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).
P.S. Pythia (paɪθiə) the Oracle of Delphi was the priestess at the Temple of Apollo. (last time I looked, I was a man) :-)
How about they included something really novel for Cyprus, a government guarantee that Title Deeds will be issued within 90 days of Completion.
Forgive my cynicism or ignorance but is this anything but time wasting by deputies to
a) fill up their empty day;
b) give the illusion that they are doing something positive;
c) create a smokescreen for prying EU eyes.
I only mention that as the transfer fee reduction is valid until 31/12/12 and is only applied at legal completion meaning, as I understand it, transfer of title.
As history shows us any new transfer will probably take years to materialise, assuming the property has been built to specification and plan – a rare occurrence indeed, or is it that the reduced fees will be applied perhaps in 18 years time when legal completion may possibly be made as long as the sales contract is lodged at land registry by the end of the year. I don’t think so – but I am a cynic (at least where land registry is concerned).
So it’s buy now and gain an eroded benefit in years to come. How will this stimulate growth in the sector given the knowledge that what you pay for may not be yours for years to come, if at all, unless you are part of that small band who have survived life long enough to receive title to your property.
Nigel, you are our Oracle in these matters, what am I missing here please?
Title deeds, title deeds, title deeds.
How many times does it have to be spelt out?
So, now it’s cheaper to buy something that you will not legally own anytime soon?