Cyprus Government abolishes property taxes

Cyprus Government abolishes property taxes

EARLIER today the House of Representatives voted unanimously to abolish or reduce Cyprus 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 its 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.

What has not been made clear in today’s announcement is whether the law will apply retrospectively, i.e. to existing buyers who have already deposited their contracts of sale or paid VAT, or whether it will only apply to future purchases.

 

Courtesy Cyprus Property News