Q.: At long last our title deeds are ready and we have been invited to attend for the transfer. We are told by our next door neighbor that notwithstanding the fact that she bought the property 10 years ago, the Lands Office demand transfer fees as on the date of transfer. Our solicitors gave us all sort of explanations, which confused us more, than giving us a clear down to earth answer. Please can you help us?
Alley Ireston (Mr & Mrs)

A.: Provided you have deposited your contract with the Lands Office at the time of purchase, then the transfer fees will be calculated on the value at that date (usually the contract price is taken, if within reason of the market value parameters at the time). If you have not deposited your sales contract, you have to provide proof that your contract date was the actual date e.g. payment, receipts etc but it depends on the Land’s Office Director to accept it or not.
On another note no interest is charged between the purchase date and the actual payment on the transfer fee.
Note the importance of depositing your sales contract with the Land’s Office, which has been repeated in this paper on a number of occasions. I feel that I must reiterate the advantages of depositing one’s sales contract.
• It acts as a charge on the land so that the registered owner cannot sell your purchased property to a third party.
• It is a claim against the property so if any mortgage and other impediments are placed after the deposit date you will have a priority claim.
• You can claim specific performance if the registered owner refuses to transfer.
• You are entitled for a refund of the property taxes if your property is worth less than £100.000 as at 1.1.80 value (it refers to your total real estate in Cyprus).

Some people are unwilling to deposit their sales contract with the Land’s Office for reasons, which I fail to understand, but it happens. Reasons such as “not to be known to third parties”, “income tax reasons”, “the payment of stamp duty be it very little”, “I intend to transfer the property to my children and in this way I avoid paying double transfer fees” etc etc are some of the reasons I get in this column – Whatever the reason it simply not worth it.
I apologize for the elongated answer, but I took this opportunity to expand on the subject.

A.P. Loizou

Q.: I travel a lot and I miss your articles and especially your Q+A column. How can I have a constant update? I hate to miss something important.
Chriss Wood

A.: Visit our website. The articles as well as the Q+A column are there. However should you miss any particular issue, let me know and I will see what I can. Thank you very much for your support.

A.P. Loizou

Q.: We have bought 4 apartments, which we intend to have them fully furnished to let. One of our options is to buy everything from IKEA. Is this a standard acceptable by Cyprus tenants?
We do appreciate that this may not be your field, but we have nowhere to turn and expect a reasonable advice.
George & Marianna Weber

A.: Thank you for your trust in me. IKEA is as good as any.

A.P. Loizou

Q.: I understand that a new pressure group has been set up (mainly foreign buyers) to take action against a particular developer. I wonder if I should join Mr Loizou.
Leslie Carram

A.: If you have a problem with the particular developer, it is better that you joint and appear as one. Extreme care is required however since if your action does not stand up in Court you stand to find yourselves being sued by the developer for libel etc. So check it with your solicitor prior to any decision on your part.

A.P. Loizou

Q.: My main entrance door is of timber and I have a problem both getting in (it gets stack) as well as letting in draft from the constant repairs. Should I change the door or keep repairing it till the end?
Clito Manassen

A.: If your door is exposed to direct sunlight and to rain, you get this, unless your door is solid and of good quality (e.g. irocco solid timber etc) timber. You can have a cover/canopy over the door but I will opt for an aluminium door (you cannot tell the difference). You can also opt for the imported aluminium doors with a wood finish (cost around £450). It is the best of both ways and it has the benefits of aluminium and timber, but it is costly.

A.P. Loizou

Q.: You say to opt for ceramic tiles, yet the other day I dropped something and a chip came off one of the tiles. Now I cannot have a replacement since the same color is nowhere to be found. Any new thoughts on this?
Andreas Andrew

A.: I always say whatever the floor finish you adopt, keep a 10% stock so that you can meet circumstances such as this.

A.P. Loizou

Q.: Shall I use a decoration for my house Mr Loizou? It is a lovely house but I need to have something personal which reflects “me”. My architect says it will be a waste of time and he is the best decorator for me. I respect my architect, but how can I have my way without upsetting him?
J.K.(Mrs)

A.: This is a typical Cypriot architect attitude, but having said that I am not too sure that local decorators can offer much other than added expense. However and since I appreciate what you say, you either put your foot down, but in order to make him happy say that the decorator’s charge is only £1.000 (will be more, but it will keep your architect happy since he will not do it for this amount). I can tell you various “lying approaches” but are you good in projecting a white lie in a convincing manner?

A.P. Loizou

Q.: Have you been told off by the Cyprus Law Society, since we do not read anymore about the ill practices of local lawyers. As you know the misfortunes of some are examples for others to avoid. So the more you publish the more readers you safeguard.
Chriss Christopher

A.: Nothing like what you have described happenned. It is just that the subject has been exhausted, but I can assure you that should I get a letter on the subject, I will publish it with my comments.
A.P. Loizou

Q.: Our home has all the latest technological gadgets yet we missed to place a central music system and we are at the dilemma whether to place pipes for the wire. Megaphones etc, which entails a lot of mess. Any solution Mr Loizou?
Keep up the good work. I have all your articles and the Q+A column in file. Who knows when we will need them. We must tell you that we impress our friends on the Cypriot real estate market matters!! Thank you.
Alkis & Pam

A.: Since I have a “record” with you guys, I must be extra careful what I say, especially when you pass on the “knowledge” to others. With regard to your query, seek the advice of your electrical engineer or even the stereo supplier. In our home we have placed the central music wire within the telephone pipes. Don’t think that you can put on the stereo in your living room and expect to listen to your music in the bedroom. It is just not practical, but yes, it is most useful to have the equipment in your daily/t.v. room and have a speaker with your dining/kitchen/sitting area. This is what we use. With respect to patio/externals we use a portable radio/CD player.

A.P. Loizou

Capital gains tax is payable by both residents and non-residents at a rate of 20% on the gains made from the disposal / sale of immovable property in Cyprus.

The indexation factor is based on the cost of the property as if it has been purchased after 01/01/80, [irrespective if it was purchased prior to 1980. The base, is the Cyprus Consumer Price Index, which is updated monthly by the Ministry of Economics. It is calculated using the index in the month preceding disposal (sale), and the Cyprus Consumer Price Index in the month of acquisition (purchase). Disposals of building sites normally use the 1980 valuation for Cyprus Consumer Price Index purposes, which value is found on the title deed.

1. If the property is the sellers’ primary residence, with land area up to 1.500 sq.m., there’s a lifetime, (i.e. once only) exemption of CY£50,000. If it is in the names of both spouses then again the sum is £50.000, [ie. £25.000 each]. Provided of course that you have lived in it for the past five years and there are no other claims for either spouses for the £10.000 mentioned below in paragraph (2). If so, then the £10.000 exemption is deducted from the £25.000 for each spouse who has exercised this exemption right.

If you purchase a new house, as permanent primary residence, then you must live in the new residence for the next 10 years before, in the case of sale, to be eligible for the exemption of £50.000, again.

2. For any other kind of property (e.g. a holiday home, plots, land), only CY£10,000 is exempt, and this exemption is per registered owner, [once only] not per property.  Agricultural land sold by a bona fide farmer, increases the exemption to CY£15.000. (You cannot claim both (1) & (2) of these exemptions! The total amount that can be claimed for both allowances must amount to £50.000 maximum).

3. Exchange of property. Capital gains tax is paid on the difference between the value of the property given and the value of the property obtained.

ie. If you exchange a €500.000 property with another property of €300.000 then the capital gains tax is on the difference of €200.000. If the exchange is equal in value, then no Capital Gains Tax is paid.

4. Part - exchange.  If a property is given for development and is part-exchanged with apartments or any other type of property from the same plot of land given for development, then the difference in value between the property given and the property received [land share value] is taxable at 20%.

The basic calculation is calculated normally like any other sale but the valuation of the property is based on the L/registry valuation, of the value of the land given and the proportion of the land that is received back as apartments etc., and is calculated as a percentage (%) of the total value of the land. 

 Therefore, if the value of the property given is €500.000 [say a plot for development into 10 apts.] and the property received [in apts is 3] have a share in the land, which is valued at €125.000, [25%] then tax is paid on the difference, which is €400.000.[80%]

 All the calculations are made as follows:

 Sales price    :                    75%   of the value

 Allowances   :                   75% of all the costs.

       5.   Other exemptions from capital gains tax include the following:

·    Transfers due to death;

·    Gifts to close relatives such as spouses or children;

·    Gift to the government or a charity;

·    Exchanges or sale in accordance with Agricultural Land Laws;

·    Exchanges of properties where the value is equal.

 If you’ve made any improvements or additions to the property, this will be added to the cost of the property [the indexation factor covers also expenses incurred] and deducted from the assumed profit made from the sale, thereby reducing your liability, provided there is written proof of the costs including Vat paid, as well as planning permission for the changes / improvements made.

Also you can deduct the following:

* Land transfer fees  - * Stamp duties paid - *  Registered Estate agents’

                                                                            commission + Vat

* Advertising costs for selling said property - * Immovable property tax

* Interest on loan made for acquisition purposes of the said property.

The tax is calculated by the difference between the total cost of the property and the sales price:

Price purchased of the property + Any other costs to the property,  x  % calculated by the Ministry of finance of the inflation from the date of purchase to today and this is deducted from the final sales price.

Example:     see below.

 Q.: Dear Mr Loizou,
I read your articles in this weeks Cyprus Weekly and was interested in the letter about "getting away from little England". My wife and I have lived in Peyia for 3 years and feel similar to Clark and Cate although we do not wish to move to a large town. We are comtemplating moving to one of the Paphos villages such as Kathikas, Arodes or Droushia in order to get to know the locals more ( we are learning Greek for this purpose)and wondered what you thought of those areas as being suitable for ourselves. We are both over 60 so would like to purchase a bungalow in order to dispense with stairs and wanted to consider either timber or steel frame construction in order to have a well insulated home with low running costs. Again your thoughts or comments would be most welcome.
Keep up the good work with your articles etc. - very much appreciated.

yours sincerely,

Brian & Christine


A.: Not a bad idea at all. It is a matter of personal choice which one of the villages you prefer to live, but of course everything is subject to availability. Please bear in mind the following. Assuming your bungalow will be approximately +-120 sq.mts., I suggest you choose a plot not less than 600-1000 sq.mts. As we are all getting older, a garden (use of pool) etc becomes more and more important.

• Make sure that if the plot is not within the development area but say within the agricultural area that the local authority will provide you with drinking water.
• Check if there are nearby services such as electricity and telephone lines.
• If in the agricultural area make sure that the local authority will collect your refuge.
• Do not be near a church, since it gets noisy at times.
• Check if in the village there are good size grocery shops for your daily needs.
• Check if any restaurants around.
• Timber houses if property built provide good insulation. Steel frame structure provide a less elastic design but large open areas with little columns.
• New applications for building permits (i.e. after 15.12.07) must meet E.U. thermal insulation requirements.
• Bear in mind that if you do not opt for a ready home you will need 6 months for the planning permit and approximately 12 months construction. Budget for (120 sq.mts.) of around £100.000 (excluding land and swimming pool-all other included).

From there on my dear readers you need good health and to look forward for an enjoyable life.
All the best.

A.P. Loizou


P.S. Perhaps our Chloraka office man Mr Allan Philips (tel.no.99803357) could help you with (amongst others of course) in your land/building search.

A.: Many thanks for your comments. What you call Ebahor is actually the District Officer. Her address is 159 Anexartisias Street, Limassol (Mrs Anastasia Mavrelli). If your land has no access and the local authority in an effort to provide access to the area has taken up part of your land this may not be necessarily a bad thing. In fact many land owners are pushing the local authorities to provide road access. Having said that it is a matter of how much land the road has taken from your site. If you have a plan of the site and the location of the “road” perhaps I could give you a better opinion at this initial stage.
Best regards,

A.P. Loizou
 

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