.
By Antonis Loizou F.R.I.C.S. – Antonis Loizou & Associates Ltd – Real Estate Valuers & Estate Agents
It appears that there is an increasing rate of title issues and this without the effects of the Building Amnesty. Be it with some years delay (approximately 4-7 years after completion) titles are being issued. This positive development has brought up at an increasing rate some problems that are related to the transfer of properties.
Transfer Fees
These are calculated on a scale as follows:
|
EUR |
Percentage % |
Fees EUR |
Cumulative Fees EUR |
|
0- 85.430 |
3 |
2.563 |
2.563 |
|
85.431 – 170.860 |
5 |
4.272 |
6.835 |
|
170.861 and over |
8 |
|
|
Discount on transfer fees:
1. No transfer fees are payable (at present) if VAT was applicable/paid at the time of purchase of the property.
2. Transfer fees are reduced (at present) by 50% on all purchases of immovable property. If of course 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, as well as on transfer by donation between spouses, spouses and children or relatives up to third degree relation, transfer fees are calculated on the estimated value of property as at the 1/1/2013 and at the following rates:
Parent to children nil
Between 3rd degree relatives 0.1%
To trustees EUR 50
The actual cost refers to very little transfer fees around EUR 100.
Transfers of immovable property by a company to another company for the purpose of a company re-organisation are exempt from transfer fees.
The date of the valuation is taken as being the date of sale/acquisition. As such, if one bought a property in the year 2002 and transfers the property now, 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 Lands Office must ascertain the value of the property on the relevant (sales) date, based on the market value on the date of sale. Usually the Lands Office accepts the actual sales price, but approximately 20% of the total is disputed by the Lands Office if it can ascertain from its own records that the market value at the time is different (usually it charges higher values and never lower!).
The main method adopted in order to ascertain the market value is the comparable one (there are others also). So, if you bought an apartment for say EUR 100,000 and the Lands Office has in the records other sales for EUR 120,000 for similar properties, it will charge you fees on the EUR 120,000.
Regrettably, a good percentage of locals and others under-value their sales/acquisition price for the purpose of saving capital gains (by the seller) and transfer fees (by the buyer) and this is widely known – hence the Lands Office stand.
Objection
You are not in a situation of take-it-or-leave-it, but if one disagrees with the Lands Office valuation, you can apply to the High Court supporting your claim using a private valuer’s report. This must be done within 40 days from the date that the Lands Office makes its final/determination assessment. What is infuriating in such cases is that even upon determination/final valuation, the Lands Office does not provide the affected parties with a written report supporting its own assessment, whereas the buyer must do so in writing, etc, in order for the Lands Office to reexamine.
On the other hand, we have the odd situation of a project of nine houses of similar size, etc, bought by myself (A.L.), an ex-minister of Finance, on ex-mayor of Nicosia etc, at the average sales price of EUR 260,000 and we were charged for EUR 300,000. In another project of 33 apartments with an average sales price of EUR 100.000/each, the buyers were charged for EUR 130,000/each. The buyers want to object but then the cost element to go to Court, legal and valuation fees would amount to the same. So under this “blackmail” approach most buyers accept this. Is this correct?
Date of Assessment
If a contract is deposited with the Lands Office, then the date of sale so recorded in the contract is the one adopted. If the contract is not deposited, you must produce your contract as well as the receipt of the down payment, so that the Lands Office can ascertain the sales date.
The Economic Situation + Transfer
After all the uphill battle to secure the deeds, it has now been ascertained that only 20% of the title deeds issued are actually transferred, and this because nowadays where every cent counts, people are not willing to come up with (say) EUR 15,000-30,000 in transfer fees since they feel that 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.
I hope that I have cleared the situation since from the various letters that we receive, it seems that there is some confusion.
