Property Tax Paid By Developer...?

Legal questions answered by Cyprus property lawyer Louise Zambartas

Moderator: louisez

Post Reply
Message
Author
Jdss
Posts: 3
Joined: 27 Oct 2016 08:45

Property Tax Paid By Developer...?

#1 Post by Jdss » 27 Oct 2016 19:11

I have just discovered that I can get title deeds for my property, which is exempt from Property Tax (I have a confirmation email from the Tax Dept.).

The developer has told me that they can get the title deeds for me, but that they have already paid tax in bulk for all properties and that I will have to pay them my share of the tax and then reclaim it from the Tax department.

The developer gave me detailed instructions on how to fill the TD 318A, so they knew that my property was not taxable, and it worries me that they want to charge me a portion of the bulk figure that they (apparently )paid to the tax department and then expect me to recover it from the tax department. This doesn't make sense because they are in a better position to claim that tax.

My fear is that, in order to get the title deeds, I pay them the "tax" amount and then run into difficulties trying to reclaim it and, perhaps, never get it back at all.

The developers have given me a figure for the fee they will charge for getting my title deeds and I am wondering whether it will be better to engage a lawyer to do it for me.

Any advice?



Nigel Howarth
Site Admin
Posts: 2175
Joined: 24 Oct 2007 14:38
Location: Erimi, Limassol, Cyprus
Contact:

Re: Property Tax Paid By Developer...?

#2 Post by Nigel Howarth » 28 Oct 2016 18:04

Hi Jdss and welcome to the forum.

I guess you didn't apply for your Title Deeds - see http://www.news.cyprus-property-buyers. ... d=00126681 ? If you had you would have avoided this situation.

Also, you should have registered the property with the Tax Department in 2014. See http://www.news.cyprus-property-buyers. ... id=0039392

The first thing you should do is check your contract of sale. The vast majority of the many contracts I have seen contain a clause similar to the following:

“As from the day the Purchasers are in possession of the property, they undertake to be responsible for and to pay all the Government, municipal and local authorities’ taxes, levies, duties or charges (if any) raised on or in connection with the possession of the Property hereby sold.”

If your contract contains this (or a similar) clause you will need to pay the developer the Immovable Property Tax (IPT) from the year in which you took delivery of the property - and then recover any legitimate overpayments from the Tax Department.

Although the property you purchased falls below the threshold at which IPT becomes payable, the developer has to pay IPT on the total 1980 values of all the properties registered in his name, including the one you purchased, and this could run into many millions of Euros. As a consequence he has to pay IPT at a much higher rate - and you can see how the tax rates have changed over the years at http://www.mof.gov.cy/mof/TaxDep.nsf/Al ... enDocument

But the developer should not be charging you for getting the deeds. He should arrange a suitable date when you and a representative from his company can visit the Land Registry office to effect the transfer of the property.

Can you let me know the 1980 value of the property on the TD 318 and the year in which you took delivery of the property and I can calculate roughly how much IPT you should be paying the developer and how much you should be able to recover from the Tax Department.

Regards,


Nigel Howarth
Independent information & advice for Cyprus property buyers
Contact Nigel Howarth
Read the latest Cyprus property news

Jdss
Posts: 3
Joined: 27 Oct 2016 08:45

Re: Property Tax Paid By Developer...?

#3 Post by Jdss » 28 Oct 2016 20:53

Hi Nigel

Thanks for your reply.

The 1980 value is €9600 and we took delivery in 2006, but the document they have given us gives the "Date of possession" as 04/11/2015

Thanks



Nigel Howarth
Site Admin
Posts: 2175
Joined: 24 Oct 2007 14:38
Location: Erimi, Limassol, Cyprus
Contact:

Re: Property Tax Paid By Developer...?

#4 Post by Nigel Howarth » 29 Oct 2016 09:11

Hi Jdss

If you took delivery in 2006, the maximum your developer should be charging you is as follows:

2006 @ 0.40% = € 38.40
2007 @ 0.40% = € 38.40
2008 @ 0.40% = € 38.40
2009 @ 0.40% = € 38.40
2010 @ 0.40% = € 38.40
2011 @ 0.40% = € 38.40
2012 @ 0.80% = € 76.80
2013 @ 1.90% = € 182.40
2014 @ 1.90% = € 182.40
2015 @ 1.90% = € 182.40
2016 @ 1.90% = € 182.40

Total: € 1,036.80

This assumes that your developer pays IPT at the top rate.

If you took delivery (possession) in 2015 the maximum charge will be € 364.80.

(Both the above assume that you have not paid IPT for 2014, 2015 & 2016 directly to the Tax Department.)

Regards,


Nigel Howarth
Independent information & advice for Cyprus property buyers
Contact Nigel Howarth
Read the latest Cyprus property news

Jdss
Posts: 3
Joined: 27 Oct 2016 08:45

Re: Property Tax Paid By Developer...?

#5 Post by Jdss » 04 Jan 2017 15:03

Hi Nigel

This is just to update you following your advice - for which I thank you very much, indeed.

After reading your instructions about how to apply, I went ahead and sent application to the Land Registry office with my supporting evidence (copies of bank statements and receipts)and they have now replied with a reference number and details of what they require (statement from seller or affidavit from myself).

So, things look good. In the meantime, I have received some documentation from the seller, including a POA for them to handle the situation. I feel uncomfortable about them handling it (possible hidden costs), so I wonder whether I should get an independent lawyer. What do you think? The seller has offered to do it for €200 and I am not sure what a lawyer would charge. Or should I just do it myself and save the cost?

Any thoughts?

Regards



Nigel Howarth
Site Admin
Posts: 2175
Joined: 24 Oct 2007 14:38
Location: Erimi, Limassol, Cyprus
Contact:

Re: Property Tax Paid By Developer...?

#6 Post by Nigel Howarth » 04 Jan 2017 20:04

Hi Jdss

If you're in Cyprus the application would cost you €10 - I cannot say what a law firm might charge. I suggest you do it yourself and save yourself €190.

As you (presumably) supplied all the evidence needed to prove that you've paid the full purchase price, I don't know why the Land Registry is asking you for an affidavit? You can download the affidavit from my website at http://www.news.cyprus-property-buyers. ... idavit.pdf

Regards,


Nigel Howarth
Independent information & advice for Cyprus property buyers
Contact Nigel Howarth
Read the latest Cyprus property news

Post Reply

Who is online

Users browsing this forum: Bing [Bot] and 1 guest