Dear Forum Moderators and Users, the situation I am describing is quite typical and your input will help greatly to a number of Property Owners to understand their rights.
A 2-bedroom flat was delivered 2.5 years ago and now the Developer has announced that the Title Deeds are ready to be transferred into the owner’s name. All it needs is just to pay remaining charges, which are based on the property valuated at 1980 as worth EUR 23,000:
- Immovable Property Tax (€23,000 x 3.5‰) €80.50 x 2.5 years = €201.25
- Land tax (€23,000 x 1.5‰) €34.50 x 2.5 years = €86.25
- Sewage (€23,000 x 5‰) €115.00 x 2.5 years = €287.50
- Interest (9% p.a) €106.98
- Administration fees (incl. V.A.T) €345.00
- TOTAL €1,026.98
These charges raise quite a few questions:
- From other communications I can see that IPT should be 3‰ , not 3.5‰
- Could you confirm please the figures for Land tax and Sewage development?
- Is it legal to put interest on these amounts? When does Developer normally pay it? I doubt it was 2.5 years ago, so that at least the term is wrong.
- Administration fee is obviously inflated, but how to challenge it is a big legal question
Many thanks in advance
Title Deeds Release charges imposed by Developer
Moderator: louisez
-
PropertyOwner
- Posts: 2
- Joined: 02 Dec 2009 21:41
-
Nigel Howarth
- Site Admin
- Posts: 3064
- Joined: 24 Oct 2007 12:38
- Location: Erimi, Limassol, Cyprus
- Contact:
Re: Title Deeds Release charges imposed by Developer
Dear PropertyOwner - welcome to the forum,
The 'Immovable Property Tax' scam is now well known and many of the developers are no more cautious in their charging.
The Cyprus Property Action Group took legal opinion on this matter and produced a guide for buyers on what they should do regarding Immovable Property Tax demands. You can find a copy of this in my magazine at http://www.news.cyprus-property-buyers. ... s/id=00517
You may also find information information in the Cyprus Property Action Groups website useful. You can find it at http://www.cyprus-property-action-group.net/
Buyers should not pay any Immovable Property Tax demanded by developers, until the developer provides evidence of what he paid to the Inland Revenue for that individual site, and additionally, what the individual buyer’s share of this payment is.
Once you have this evidence and your Title Deeds you can apply to the Inland Revenue Department for the for the whole of any legitimate payment made on your behalf by the developer.
I've not heard of the 'Land Tax' before - I need more information before I can comment.
Sewage taxes seem reasonable for 2.5 years, but without seeing the documentation on how this has been calculated, I cannot confirm.
As for the interest charges - what are these for? Has the developer presented a bill previously that has not been paid?
Administration fee - again what is this for? Is it to do with the management of the shared facilities?
Regards,
The 'Immovable Property Tax' scam is now well known and many of the developers are no more cautious in their charging.
The Cyprus Property Action Group took legal opinion on this matter and produced a guide for buyers on what they should do regarding Immovable Property Tax demands. You can find a copy of this in my magazine at http://www.news.cyprus-property-buyers. ... s/id=00517
You may also find information information in the Cyprus Property Action Groups website useful. You can find it at http://www.cyprus-property-action-group.net/
Buyers should not pay any Immovable Property Tax demanded by developers, until the developer provides evidence of what he paid to the Inland Revenue for that individual site, and additionally, what the individual buyer’s share of this payment is.
Once you have this evidence and your Title Deeds you can apply to the Inland Revenue Department for the for the whole of any legitimate payment made on your behalf by the developer.
I've not heard of the 'Land Tax' before - I need more information before I can comment.
Sewage taxes seem reasonable for 2.5 years, but without seeing the documentation on how this has been calculated, I cannot confirm.
As for the interest charges - what are these for? Has the developer presented a bill previously that has not been paid?
Administration fee - again what is this for? Is it to do with the management of the shared facilities?
Regards,
Nigel Howarth
Independent information & advice for Cyprus property buyers
Contact Nigel Howarth
Read the latest Cyprus property news
Independent information & advice for Cyprus property buyers
Contact Nigel Howarth
Read the latest Cyprus property news
-
PropertyOwner
- Posts: 2
- Joined: 02 Dec 2009 21:41
Re: Title Deeds Release charges imposed by Developer
Dear Nigel
Many thanks for your reply.
I’ve checked the Developer’s standing on the points that were not clear. Naturally, they insist on their charges and would try their best to avoid producing any documentation.
If €23.000 sounds like a reasonable value for a 2 bedroom flat (at 1980 valuation), perhaps we could agree with 0.35% IPT, 0.15% Land Tax and 0.5% Sewage Tax.
Nonetheless, Interest and Administration charges look quite dubious. Do you think it is possible to challenge them in some way?
I provide below excerpts from the Developer’s reply:
1. They claim that the Land Tax is a well known thing in Cyprus (I’m still not sure what it is)
2. To my request to send evidence of what they paid to the Inland Revenue for the whole site and what my individual share of this payment is, they replied the following (not true, obviously): “Sending the bills in advance is impossible, as the actual bill can only be calculated after the separate deeds are issued. Furthermore, we do not have any individual bills to send to you”.
3. Interest charges at 9%: “We have been paying all the various bills up till now and therefore this money is compensated to us with interest”. But they charge the interest as if all the bills were paid on the day of the property delivery, ie 2.5 years ago. In addition, 9% interest is much higher than the Bank of Cyprus standard interest rate.
4. Administration charge of €345: “It is to cover all the work that we do while the Title Deeds are issued”.
I am not familiar with the judicial system in Cyprus, but suspect that challenging these charges in court will also incur huge legal fees. Nonetheless, what is it if not extortion?
Will appreciate your thoughts
Thanks a lot
Many thanks for your reply.
I’ve checked the Developer’s standing on the points that were not clear. Naturally, they insist on their charges and would try their best to avoid producing any documentation.
If €23.000 sounds like a reasonable value for a 2 bedroom flat (at 1980 valuation), perhaps we could agree with 0.35% IPT, 0.15% Land Tax and 0.5% Sewage Tax.
Nonetheless, Interest and Administration charges look quite dubious. Do you think it is possible to challenge them in some way?
I provide below excerpts from the Developer’s reply:
1. They claim that the Land Tax is a well known thing in Cyprus (I’m still not sure what it is)
2. To my request to send evidence of what they paid to the Inland Revenue for the whole site and what my individual share of this payment is, they replied the following (not true, obviously): “Sending the bills in advance is impossible, as the actual bill can only be calculated after the separate deeds are issued. Furthermore, we do not have any individual bills to send to you”.
3. Interest charges at 9%: “We have been paying all the various bills up till now and therefore this money is compensated to us with interest”. But they charge the interest as if all the bills were paid on the day of the property delivery, ie 2.5 years ago. In addition, 9% interest is much higher than the Bank of Cyprus standard interest rate.
4. Administration charge of €345: “It is to cover all the work that we do while the Title Deeds are issued”.
I am not familiar with the judicial system in Cyprus, but suspect that challenging these charges in court will also incur huge legal fees. Nonetheless, what is it if not extortion?
Will appreciate your thoughts
Thanks a lot
Re: Title Deeds Release charges imposed by Developer
Nigel has asked me to assist with your query.
In common with Nigel I also do not know what the “Land Tax” is that the developer is claiming for. I have seen many statements from developers issued prior to transfer and have not yet seen such an item listed on the charges.
I understand that developers do in fact receive one bill for immovable property tax per year which covers all of their land holdings. As the bill is not broken down into individual plots there is indeed a difficulty for both the developer and the owner to ascertain exactly what tax the developer has paid in respect of their individual landholdings and the properties thereon.
The interest payable on sums owed to the developer should have been specified in your purchase contract and I would not be at all surprised if it was specified at 9% as that was the rate of interest in popular use in Cyprus for many years. If the contract contains provision for interest to be charged by the developer in this manner then you are under a contractual obligation to pay.
The administration charge of €345 for the work done by the developer to ensure the separate title deeds are issued is something which I have seen on many developers’ statements and €345 is at the lower end of the scale.
All in all I believe that it is not worth your while to challenge your developer on these issues. The total amount being claimed from you is just over €1,000 and it will very quickly cost you more than that to have anyone making enquiries at the Tax Office and to take up the issue with the developer.
I have handled cases where the developer is claiming in excess of €20,000 in a situation such as yours and in those cases it is worth bringing a legal challenge. In your case, we know that the developer will have had some justifiable expense which he is entitled to seek to pass on to you. Whilst an element of overcharging is probably going on it is not sufficiently extreme for you to justify incurring the expense of a legal challenge.
In common with Nigel I also do not know what the “Land Tax” is that the developer is claiming for. I have seen many statements from developers issued prior to transfer and have not yet seen such an item listed on the charges.
I understand that developers do in fact receive one bill for immovable property tax per year which covers all of their land holdings. As the bill is not broken down into individual plots there is indeed a difficulty for both the developer and the owner to ascertain exactly what tax the developer has paid in respect of their individual landholdings and the properties thereon.
The interest payable on sums owed to the developer should have been specified in your purchase contract and I would not be at all surprised if it was specified at 9% as that was the rate of interest in popular use in Cyprus for many years. If the contract contains provision for interest to be charged by the developer in this manner then you are under a contractual obligation to pay.
The administration charge of €345 for the work done by the developer to ensure the separate title deeds are issued is something which I have seen on many developers’ statements and €345 is at the lower end of the scale.
All in all I believe that it is not worth your while to challenge your developer on these issues. The total amount being claimed from you is just over €1,000 and it will very quickly cost you more than that to have anyone making enquiries at the Tax Office and to take up the issue with the developer.
I have handled cases where the developer is claiming in excess of €20,000 in a situation such as yours and in those cases it is worth bringing a legal challenge. In your case, we know that the developer will have had some justifiable expense which he is entitled to seek to pass on to you. Whilst an element of overcharging is probably going on it is not sufficiently extreme for you to justify incurring the expense of a legal challenge.