No tax on mortgaged property sales
Those selling their mortgaged property in Cyprus to reduce or repay their mortgage debt will be exempt from paying capital gains, income tax, special defence contributions, as well as stamp duty and transfer fees.
Borrowers who sell their property to reduce or repay their loans on the free market will be eligible for tax relief, extending a regime that has so far applied only for sales to banks.
Following Tuesday’s unanimous vote on DISY’s five proposed bills at the House of Representatives, those who sell their property to third parties on the free market will be exempt from paying capital gains, income tax, special defence contributions, as well as stamp duty and transfer fees, provided the sale is to reduce or repay loans as part of a loan restructuring deal.
Borrowers will be able to enjoy tax relief until the end of 2019. The relief concerns in particular the sale of mortgaged property by the borrower on the free market with a view to reducing or repaying non-performing loan in the context of loan restructuring. Covered by the new legislation are loans made up to 31 December 2015.
The exemption from the payment of taxes and fees can be applied both to the sale of a property to a private buyer and to the sale to a company. The law will also cover loans that will be transferred to the new non-performing loan management body. That is, borrowers whose loans will join the entity will be able to sell their Cyprus property on the open market for the purpose of reducing or repaying the loan.
DISY chairman, Averoff Neophytou said these laws will make it easier for borrowers to pay off their debts. He remarked that it was a mistake that the previous laws did not cover borrowers selling mortgaged property on the open market. This, he stated, was exploited by the banks who pressed borrowers to sell at lower prices through them, in order to take advantage of the relief.
Copyright © Cyprus Property News
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