In Cyprus, Britain and Spain, those buying property are required to pay a tax on the property based on its market value at its date of purchase.
- In Cyprus this tax is known as Property Transfer Fees.
- In Britain it’s known as Stamp Duty Land Tax (SDLT).
- In Spain it is called Impuesto de Transmisiones Patrimoniales (ITP).
In all cases the tax is calculated on a percentage of the assessed market value of the property at its date of purchase.
If you search through our archive you will find reports of the Land Registry assessing market values at 58 per cent, 37 per cent, 36 per cent, etc. more than the purchasers actually paid for the property, resulting in them having to pay significantly higher Property Transfer Fees than they anticipated.
Although it is possible to appeal the Land Registry’s valuation by applying to the Supreme Court supporting your claim with a report from a private valuer, the secretive nature of the Land Registry in Cyprus means that it will not provide the appellant with a written report supporting its own valuation.
It seems that the Spanish authorities have caught the Cyprus tax disease as the cash-strapped Spanish government is combing through tens of thousands of house sales that have taken place since property prices plummeted following the country’s deep recession over the past four years.
The authorities are comparing the declared sales price to what they believe the real value is. If the house’s sale price does not match with the official valuation of the property, the owner is asked to pay the difference in duty.