Property Transfer Tax - Value on Sales Contract

[tucano]

Dear Nigel,

My 2006 sales contract has CYP 173000 written on it, and I have a receipt from the LR confirming it was lodged by my lawyer. Assuming that one day I might get as far as Title Deeds, will the LR's 'assessed' value, at the 1980 rate, be the one I actually pay tax on? I had many extras paid for, prior to the sales contract being registered, but these don't seem to be accounted for anywhere - or are they? If you 'added' all the extras on, the new total value would have been well over CYP 200,000. Is it the contract sales figure that's used?

Thanks,

Tucano

[Nigel Howarth]

Hi tocano,

There are three taxes involved:

Firstly, 'Property Transfer Fees'; this tax is equivalent of the UK 'Stamp Duty Land Tax' (SDLT) and you pay them when ownership of the property is transferred to your name.

In the UK, because Title Deeds are available when you take possession of a property you pay SDLT at the same time that you purchase the property. But because it takes so long in Cyprus to issue Title Deeds, you pay 'Property Transfer Fees' when the Title Deeds become available and when they are free from any 'encumbrances' (claims or charges against the property).

'Property Transfer Fees' are based on the assessed value of the property at its time of purchase - and this is worked out by the Land Registry using the assessed prices of similar properties purchased at the same time in the same area as yours.

But there is some controversy at the moment because the Land Registries are apparently overvaluing properties to get more money into the government's coffers. You can read an article about this at http://www.news.cyprus-property-buyers. ... /id=004712

Secondly, there is the 'Immovable Property Tax' that is paid to the Inland Revenue. This is based on the Land Registry's assessed 1980 value of the property, which will be shown on its Title Deed - when it is eventually issued.

Thirdly, in some areas (including mine) there is a local property tax payable to the local community. This is also based on the Land Registry's assessed 1980 value of the property and is in the region of 0.15% - 0.2% of the assessed value.

Regards,