Title Deed Transfer Tax

Do you have a problem getting your Title Deeds?
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Cary-Pas
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Title Deed Transfer Tax

#1 Post by Cary-Pas » 20 Jul 2012 13:28

Correct us if we are wrong, but we thought that Cyprus was a European Community Member, indeed, that they are holding the Presidency currently. This being so they should be subject the the Laws pertaining to the Community, particulary the Right to Information, the Right to Equal Treatment etc.
How can they still operate under the banner of a "Secret Society" when it comes to historical calculations for IPT purposes without being challenged?

They also seem to be able to discriminate between singles and marrieds when it comes to calculating the fees payable to obtain the Title Deeds. In our example I purchased the property as sole buyer and now find we have to pay 43,000 euros tax whereas if I had a partner and we had made a joint purchase the bill would be 12,000. Why the prejudice when the tax relates to the property not the person.
Since arriving here we have set up a company and now want to amend the contract to include the Company as a joint purchaser but the Developer says they will not amend or re-assign the sale agreement. The previous solicitor did not deposit the contract with the Land Registry and currently the developer is shown as the owner of the land we are paying for. We informed the Mortgage Company who were alarmed that they were funding a piece of Real Estate for us which we didn't own!
The bank have said that they are not willing to give an advance to cover the 43k which the LR want so we are at stalemate. 12k we might manage but 43k most certainly not.
Has anyone any experience with the application of the European Equality Law or perhaps know of some valid reason for the unfair treatment.
New Member
Gill



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Re: Title Deed Transfer Tax

#2 Post by Nigel Howarth » 20 Jul 2012 19:26

Hi Gill and welcome to the forum.

Unfortunately, laws concerning immovable property are outside the remit of the EU and are the responsibility of each EU member state.

In England and Wales
  • The Land Registry operates an open register which means that copies of all documents referred to on the registered title can be obtained by anyone, subject to payment of the necessary fee.
In Cyprus
  • Information or documents in the public register of Titles connected with the ownership of immovable properties and charges or encumbrances lodged against them are treated as confidential and unavailable for public inspection.
Regarding Property Transfer Fees - there is no distinction between singles and marrieds. What counts is the number of people whose names appear on the contract of sale as the purchasers. Property Transfer Fees are calculated on a sliding scale based on the market value of a property as follows:
  • 3% - on the first € 85,430

    5% - on the next € 85,430

    8% - on the remainder
So for a property with a market value of € 200,000, the Transfer Fees would be € 9,165.59; for a property with a market value of € 400,000, the Transfer Fees would be € 25,165.59.

But if two people buy a property with a market value of €400,000 (regardless of their relationship) the fees are calculated as if each of them bought a property with a market value of € 200,000. So they would each pay € 9,165.59 (€ 18,331.18 in total). If three people bought the same property, they would each pay € 4,958.05 (€ 14,874.15 in total).

I'm surprised that the mortgage company was alarmed that they were funding a piece of Real Estate for us which you didn't own. You will not own the property until its Title Deed has been issued and registered in your name - and this can take many, many years.

From what you say, I believe the Title Deeds have been issued? If this is the case, you cannot transfer the property to your company because, until you pay the Property Transfer Fees, the property is not legally yours.

It sounds to me as if your previous solicitor was useless! He should have deposited your contract of sale at the land registry.

Unfortunately bad legal advice is a very common problem in Cyprus and you may wish to complain to the Bar Association on the grounds of 'inadequate professional services'. You can find further details at http://www.cyprusbarassociation.org/cms ... page_id=29

There are several cases pending with the ECHR regarding consumer protection issues related to property in Cyprus.

Earlier today I published an article from the British High Commission - British High Commission advises extreme caution.

There was also a debate in Parliament on Wednesday (you can find it in Hansard) - here's an extract:
  • Mr Cash: Will the Minister commit to looking into the question of the fraudulent title to land? Many thousands of English -British - people have land in Cyprus. I raised that matter when I visited. Will he commit to taking that forward, to ensure that there is a proper resolution in the courts so that these titles can be remedied?

    Mr Browne: I will happily undertake to task the Department with looking into that. The Minister for Europe or I will write to my hon. Friend.
Regards,


Nigel Howarth
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Cary-Pas
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Re: Title Deed Transfer Tax

#3 Post by Cary-Pas » 23 Jul 2012 15:00

Dear Nigel
Thank you for your detailed and comprehensive reply and the update on the situation with regard to current cases under scrutiny.
The beauty of Europe is that all countries are different but the European Land Information Service exists to encourage co-operation across the sectors. There are five Countries already connected to the digitised system and another 15 Countries pending, just waiting to go on. The ultimate aim is to provide a valuable look up service throughout Europe. Cyprus is not currently on either list but they are running against the will of the Community on this aspect and one wonders how long they will continue to flout the organisation’s plans.
The Equality Laws affect everyone across sectors and Individuals and Companies have redress if they find a specific rule which unfairly militates against them because of their status or other specified reasons. The Property Tax received by the Government should not depend on the number of purchasers, it should be – one piece of land, one amount of tax due for it. Why should a sole purchaser be fleeced?
I agree with your calculations and methodology for the computation of the Property Transfer Tax but I was not referring just to people who are married, although that is one common example, any kind of partnership will suffice for the purpose of joint purchase.
See it from the point of view of a single with no partner/joint purchaser. They buy the same piece of land or property as the joint purchaser but, in your example they are charged €25,165 instead of €18,331 which the couple pay in total, or €14,874 which three people pay. This doesn’t happen with Stamp Duty which in effect is the same kind of Tax. It is levied on the value of the property because that what it is, a “property tax” not a head count! So say it was 15% of €400,000, the duty would be €60,000. No matter how many joint purchasers there are, the tax received by the LR is still €60,000. To my way of thinking the Cyprus charge is unfair to single purchasers with no availability of marriage partner/relative, business associate or whatever. The higher the value of the property the worse the discrepancy gets.
With regard to the alarm felt by the Bank funding the Mortgage, once the Sales Contract is signed there is a binding agreement between the two parties to transfer the Title of the Land at some point in the process of purchase. The correct conveyance procedure is for the lawyer to deposit the contract with the Land Registry to safeguard the purchaser’s position until the Title can be transferred. This acts as a flag to warn the LR if an unscrupulous developer tries to raise cash on your plot. So here we are talking about no warning flag and no protection of the buyer’s rights (including the Financing Agent) as opposed to owner’s rights which you mention; they don’t operate until the Deeds have transferred.
With regard to our purchase there was no deposition of contract at the time of sale and no deeds are yet held. In fact the Land Registry records show only the developer as owning the land and our interest as purchaser is not known. You are right that the Lawyer did not do the job properly but in doing so has given us the chance to amend or re-assign the sales contract to include our company and so make us joint owners instead of just me. The buyer should have this right to amend the names on the contract before becoming the owner of the property. Indeed this selling on of contracts before purchase is common place in the USA where they have labelled it, Real Estate Wholesaling!
With Kind Regards
Gill



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Re: Title Deed Transfer Tax

#4 Post by Pantheman » 23 Jul 2012 16:18

Cary-Pas wrote:See it from the point of view of a single with no partner/joint purchaser. They buy the same piece of land or property as the joint purchaser but, in your example they are charged €25,165 instead of €18,331 which the couple pay in total, or €14,874 which three people pay. This doesn’t happen with Stamp Duty which in effect is the same kind of Tax. It is levied on the value of the property because that what it is, a “property tax” not a head count! So say it was 15% of €400,000, the duty would be €60,000. No matter how many joint purchasers there are, the tax received by the LR is still €60,000. To my way of thinking the Cyprus charge is unfair to single purchasers with no availability of marriage partner/relative, business associate or whatever. The higher the value of the property the worse the discrepancy gets.
Just a point of correction here. You are reading this all wrong. The TFs ARE based on the value as is the stamp duty. The RoC makes if cheaper for you by allowing you to share the value price between joint owners, and hence arriving at a lower TF. If they didn't you would just pay the full whack as you would with Stamp Duty. In fact, they are doing you a favour that you are complaining about.

The other matters are a separate issue, I just wanted to put the record straight regarding the TFs.


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Re: Title Deed Transfer Tax

#5 Post by Nigel Howarth » 23 Jul 2012 17:04

Hi Gill

For the benefit of others, I published an article on the Cross Border Electronic Conveyancing (CROBECO) scheme about a year ago - EU funded scheme to make property purchasing safer . And I'm sure I published article that included a statement from the former Interior Ministry saying that Cyprus would not be joining the scheme.

On the point about whether taxing individuals higher is against equality laws, as a (former) UK tax payer - because I was married, I paid less income tax that a single man - I had a 'married man's allowance'.

Unfortunately, as many people have discovered, depositing a contract of sale does not guarantee that that title to the property (ownership) will be registered in the buyer's name. The government introduced legislation last year to improve the protection afforded to house buyers, but it has much work to do improve the processes involved in issuing title deeds and improve consumer protection.

Later this week I hope to be able to publish an update on what progress is being made by the EU with regard to Cyprus, immovable property and consumer protection.

Regards,


Nigel Howarth
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Cary-Pas
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Re: Title Deed Transfer Tax

#6 Post by Cary-Pas » 26 Jul 2012 14:15

Nigel, it's good to see that there is ongoing concern and action on the open and transparent issue.
I would really like to take advantage of the joint purchase relief but the developer will not amend the sales contract to add the company as a joint purchaser, even though it has not been deposited. This means we are unable to realise the benfits to which you refer and as I say this is the difference between 43k and 12k.
Regards
Gill



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Re: Title Deed Transfer Tax

#7 Post by Nigel Howarth » 26 Jul 2012 15:55

Hi Gill

You'll need to check this with a lawyer - I believe you may be able to use a 'vesting'/'assignment' contract to transfer your rights and obligations under your contract to the company.

A company purchase is different to an individual purchase - and even if the developer were to agree, I'm sure you couldn't just add the name of the company to an existing agreement.

Incidentally, the developer need know nothing about the vesting contract. But I believe a problem could arise if you had a mortgage on the property that the developer had guaranteed. (Vesting contracts were introduced last year to help avoid problems when someone sells a property for which Title Deeds have yet to be issued).

There's an article about transferring property to a company at http://www.buy-cyprus-property.co.uk/ar ... ompany.php

Pan may have more information.

Regards,


Nigel Howarth
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