By Antonis Loizou FRICS
There appears to be an increasing rate of title deeds issue and although with some delay (approximately four to seven years after completion), this positive development has highlighted some problems related to the transfer of property.
Transfer fees are calculated at a percentage of the value according to how much it is in addition to a fee. Currently no transfer fees are payable if VAT was applicable/paid at the time of purchase of the property. If no VAT was paid, they are currently reduced by 50 per cent.
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 of kindred, transfer fees are calculated on the estimated value of property as at the 1/1/2013 and at the following rates: Between spouses 0.1%, Parent to children 0%, between third degree relatives 0.1%, to trustees €50. The actual cost refers to transfer fees of around €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 2002 and transferred it now, the transfer fees will be based on the market value on the date of the acquisition i.e. 2002.
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 per cent of values are disputed by the Lands Office if it can ascertain from its own records that the market value at the time is different.
Regrettably a good percentage of locals and others under-declare 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.
If you disagree 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 approximately 40 days from the date the Lands Office makes its final/determination assessment.
If a contract is deposited at 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.
After all the uphill battle to secure the deeds, it has now been ascertain that only 20 per cent of the title deeds issued are actually transferred.