Article by: emmanuel@seekinternationalproperty.net (Emmanuel Adeyanju) Published: 07/06/2012

Cyprus Government Property Tax

Please note two law changes voted on 25th May by the Cyprus Parliament which are relevant (and positive!)

1. The rule for no transfer fees if the property is subject to VAT, or half when the property is exempt (subject to provisions as before), is extended until the end of 2012

2. The rule for reduced 5% VAT on the first residence (subject to provisions as before) is extended to include all foreign buyers provided that they will use the property as their main and permanent place of residence in the Republic of Cyprus.

More good news for the prospective buyer in Cyprus..coupled with the Euro rate and chance to save several thousands in transfer fees now is definitely a good time to get serious about buying in Cyprus!

In a measure to designed stimulate growth in the Island`s property sector by reducing the cost of home ownership, Cypriot MPs unanimously agreed to abolish or reduce Property Transfer Fees at a meeting of the House of Representatives earlier today.

The House of Representatives voted unanimously to abolish or reduce property transfer fees for a period of six months, according to a report in Stockwatch.

- For those who do not pay VAT when they buy their house, property transfer fees are to be reduced by 50%.

- For those who pay VAT on their house purchase, no transfer fees will be payable.

The House also approved an amendment to the bill enabling those who submit applications under the provisions of the Town Planning Amnesty to enjoy the same benefit.

The draft law will be effective for six months, until the Island`s Government submits a full proposal to the House.

Property Transfer Fees are based on the Land Registry`s assessment of the market value of a property at its date of purchase. However, using its discretion to reassess the amount of Transfer Fees payable, the Land Registry relies on it s own historical data in a way that cancels out any transfer tax benefit of a "bargain-buy", which can result in double the expected amount being levied.

There have been many reports of the Land Registry bumping up the perceived value of properties in order to extract higher Transfer Fees to help boost state coffers. This practice, which has been labelled "State Sponsored Fleecing" in the media, has done nothing to enhance the reputation of the Island.

The bill applies to cases where a contract of sale has been lodged at the Land Registry but for whatever reason a Title Deed is not issued within six months. It comes into immediate effect and is not retrospective.

Article Link: http://www.property-partnership.com/overseas-property-guides/overseas-property-guide.cfm?id=396

Please contact the author at emmanuel@seekinternationalproperty.net for more information.