On Thursday 3rd November the House of Representatives in Cyprus voted to approve a Bill aimed at reducing transfer
fees in property transactions. The draft bill is under finalisation and could be effected shortly. Property transfer
tax represents a considerable levy on purchasers of property on the island and the aim of the latest measure is to prompt the struggling property market by offering buyers a considerable incentive to buying on the island and completing the transfer of the property into their name.
Why the Reduction?
The property market has faced a considerable slow down with sales dropping in October for the 15th month running according to Land Registry data. In the first 10 months of the year of 2010, 7160 deeds of sale were deposited at the Land Registry, compared with 5882 over the same period this year. The measure is designed to encourage new purchasers across the island.
How Do the Measures Apply?
Transfer duties will be cut by 50% on a property for which VAT has not been paid and transfer duties will be fully abolished for a property where VAT has been paid on purchase.
For How Long Will the Measures Apply?
The reductions are temporary; applying for a limited period of 6 months only, during which time it is anticipated that the government will have occasion to draw up proposals for review of transfer duties.
Will the Measures Work?
Certainly the new reductions are an incentive for purchasers to go ahead and transfer their properties in the next six months. Some commentators have criticised the draft bill on the basis that it does not mention fields (the law is phrased to include plots and buildings) and that it exempts houses and flats sold for the second time. Other commentators do not believe that the
property market will be revived until property prices are dropped. However, generally it is believed that the step is a positive one and (albeit to a greater or lesser extent) will encourage more transfers to take place in the next six months.
If you need advice on purchasing or transferring a property into your name, please contact us.