Cyprus Law Firms

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 sometimes complex, time consuming and on some occasions problematic. The Cypriot Parliament in a need to stimulate economic growth in a sector that has been vigorously affected by the economic crisis took the initiative and unanimously agreed to abolish or reduce Property Transfer Fees under certain circumstances. The following amendments will be applicable for only 6 months as from 2.12.2011.

• There will be no transfer fees for those who pay VAT on the purchase, of immovable property (VAT is imposed on properties that town planning permit was submitted after 1/5/2004).
• Property transfer fees are to be reduced by for 50% purchases of immovable property on which VAT is not imposed.

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.

The fees are calculated based on the market value and cumulatively with each scale:

• If the value is up to €85.430 the transfer fee is 3%
• If the value is between €85.430 to €170.860 the transfer fee is 5%
• If the value is from €170.861 and above the transfer fee is 8%

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. 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 on 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.

It should be noted that when the contract is prepared and submitted to the Land Registry before 1/6/2012 but the registration occurs after 1/6/2012 the exemptions mentioned above apply.

Cyprus Lawyers N. Pirilides & Associates LLC

Comments are closed.