No tax on mortgaged property sales

No tax on mortgaged property sales. Non-performing loans (NPLs) in the Cypriot construction and real estate sectors are amongst the highest in Europe. Due to a huge number of banks and a very competitive market, on some stage banks started to make the credit system easier. Trying to attract clients most banks made the loans cheaper and didn’t pay a lot of attention to risk studies.

At present the Government is in the process of preparing proposals to improve the insolvency and foreclosure laws to tackle non-performing loans. People selling their mortgaged property in Cyprus to reduce or repay their mortgage debt will be exempt from paying taxes. For example, from capital gains, income tax, special defence contributions, as well as stamp duty and transfer fees. This will extend the regime that has so far applied only for sales to banks. This bill was proposed by DISY to the House of Representatives.

Tax relief

Borrowers will be able to enjoy tax relief until the end of 2019. 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. 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.

The source: Cyprus Property News

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