The property transfer matrix
There is an increasing rate of title deeds being issued, albeit, with some delay of 4-7 years or more after completion, the titles are being issued.
Although a positive development, this has created an increasing number of other problems related to property transfers.
Transfer Fees
The transfers are calculated on a scale as follows:
Discount on transfer fees
At present, no transfer fees are payable if VAT was applicable or paid at the time of purchase of the property.
Transfer fees are reduced by 50% on all purchases of immovable property if VAT was not paid.
Transfer fees paid on the transfer of property to a family company are refunded in five years provided the company still owns the property, and there have not been any changes to its shareholders.
On the transfer of immovable property from a family company to its shareholders and transfer by donation between spouses, spouses and children or relatives up to third-degree, transfer fees are calculated on the estimated value of the property as of 1/1/2013 at the following rates: Between spouses 0.1%
Parent to children nil
Between third degree relatives 0.1%
To trustees EUR 50
The actual cost is a very small transfer fee of around EUR 100.
Transfers of immovable property by a company to another company for re-organisation are exempt from transfer fees.
The date of the valuation is based on the date of sale/acquisition.
If one bought a property in 2002 and transfers the property today, the transfer fees will be based on the market value on the date of the acquisition, i.e. 2002.
Market Value
The law stipulates that the Land Registry Office must ascertain the property’s value on the relevant (sales) date, based on the market value on that date. Therefore, usually, the Registry Office accepts the actual sales price.
Still, approximately 20% of the total is disputed if it can ascertain from its records that the market value at the time is different (usually, it charges higher values and never lower).
The main method adopted to ascertain the market value is the comparable one, among others.
So, if you bought an apartment for, say, EUR 100,000 and the Land Registry Office has in its records other nearby sales for similar properties at EUR 120,000, it will charge you transfer fees based on the EUR 120,000.
Regrettably, a good percentage of Cypriots and others under-declare their sales/acquisition price to save capital gains (by the seller) and transfer fees (by the buyer).
This is widely known – hence the position of the Registry Office.
Objection
It is not all black and white, but you can appeal to the Supreme Court supporting your claim using a private valuer’s report if one disagrees with the Office valuation. This must be done within 40 days from the date that the
Registry Office makes its final/determination assessment.
In such cases, what’s infuriating is that even upon determination/final valuation, the Land Registry Office does not provide the affected parties with a written report supporting its assessment.
In contrast, the buyer must do so in writing for it to reexamine the case.
On the other hand, we have the odd situation of a project of 9 houses of similar extent, bought by me, an ex-minister of Finance, an ex-mayor of Nicosia and others, at the average sales price of EUR 260,000 and we were charged EUR 300,000.
In another project of 33 apartments with an average sales price of EUR 100,000 each, the buyers were charged at the rate of EUR 130,000.
The buyers want to object, but then the cost of going to Court, legal and valuation fees would amount to the same.
So, under this “blackmail” approach, most buyers accept this. Is this fair?
Date of Assessment
If a contract is deposited with the Land Registry Office, then the date of sale recorded in the contract is the one adopted.
If the contract is not deposited, you must produce your contract and the receipt of the down payment so that the Office can ascertain the date of the sale.
The Economic Situation + transfer
After all the uphill battles to secure the deeds, only 20% of the title deeds issued are transferred, and this because nowadays, every cent counts, people are not willing to come up with (say) EUR 15,000-30,000 in transfer fees.
They feel the fees are fixed on a certain date, and since no interest is charged and provided you have no immediate use of the title, this may be a solution, be it temporary.
However, the time span entails dangers relating to any possible problems that the owner may have, making a transfer difficult and sometimes impossible.
My advice is to have the property transferred as soon as possible from the title issue.