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About buying

BUYING PROPERTY IN CYPRUS

If we'll compare Cyprus to many other countries, the procedures and law of buying a property in Cyprus by foreigners are relatively simple. Non-Cypriots are permitted to buy estate for their personal use, either: 

 

a) an apartment or a house
b) a house on a building site not exceeding 3 donums (4,012.5 sq. meters) or
c) a piece of land not exceeding 3 donums for the purpose of erecting a house within a reasonable time.

 

PERMISSION TO BUY PROPERTY

Permission to buy property must be granted by the Council of Ministers. In order to receive it, an application must be submitted after the agreement is signed with all the necessary documents required by the Council of Ministers. It takes about 2-3 months time for the Council of Ministers to approve and grant this permission to a foreigner.  In the meantime, however, purchasers may take possession of the property without restriction. In most cases the foreigners are using lawyers or agents who are receiving this permission on their behalf.  

 

ACQUIRING THE TITLE DEED

Transfer of ownership from vendor to purchaser is accomplished by a simple procedure through the Cyprus Land Registry Office, either by the buyer or by appointed third party with a Power of Attorney. In the case of a non-Cypriot, evidence of payment for the property with foreign exchange must be provided as a prerequisite for registration. The contract of sale must be in writing, and it is advisable that such contracts be registered at the District Land Registry Office within sixty days from the contract date. This protects the buyer's rights to the property and provides additional safeguards. In case if the contact is not registered, the vendors can resell or mortgage the property as there some cases of that kind happening in Cyprus. When issued, the title deed will be register in the name of the buyer, and will be recorded in the Government archives. The Government archives are confidential and will not be published or made accessible under any circumstances.  At any time after the purchase, the buyer may sell or dispose of the property at will, provided that he/she has a valid contract. 

 

TAXES & FEES 

The transfer of title can be affected once the Council of Ministers' permission is obtained and the Central Bank of Cyprus confirms receipt of the foreign funds. Upon transfer of the property and registration in the purchaser's name, the District Land Registry Office will charge Transfer Fees, which are based on the market value of the property at the time of purchase, and are calculated as follows:

 

Value up to (EURO)

Transfer fee rate  (%)

- 85,441

3%

85,441 - 170,882

5%

over  170,882

8%

 

Example, total cost of property as per contract is 270,000 EURO

First EURO 85,441

3% = EURO 2,563

Next EURO 85,441

5% = EURO 4,272

Next EURO 99,118

8% = EURO 7,929

 

EURO 14,764

 

STAMP DUTY

Stamp duty is due at the time of signing the contract. Stamp duty is levied at the rate of 0.15% per EURO 1,000 up to EURO 170,882 and thereafter at the rate of 0.20% per EURO 1,000. The purchase contract must be stamped within 30 days of its dated signature; otherwise a fine will be imposed.

 

IMMOVABLE PROPERTY TAX

According to the Cyprus legislation as from 1 January 1980, all property acquired by foreigners in Cyprus are subject to immovable property tax. The annual immovable property ownership tax for property of value of more then 170.882 EURO is based upon the value of the property. 

Certain immovable properties are exempt.

Value of property
EURO

Annual Property tax
(rate per thousand ‰)

Up to 170.882

exempt

170.882 - 427,200

0,25

427,200 - 854,490

0,35

over 854,490

0,40

 

CAPITAL GAINS TAX

Should the purchaser decide to sell the property at a later date, Cyprus Law provides that the full amount paid for it in foreign exchange may be transferred abroad at the time of the re sale. The equivalent of the full purchase price and any increase in value of the property may be transferred immediately. Property sales in Cyprus are subject to Capital Gains Tax at the rate of 20% on the gain, however the first EURO £17,088 are tax-exempt.

 

INHERITANCE TAX

Inheritance tax is not imposed

 

LEGAL SAFEGUARDS FOR FOREIGN INVESTORS

Contrary to the risks inherent in the purchase of property in some countries, Cyprus has never been involved in the nationalization of any sector of the economy, nor in the expropriation of property owned by foreigners. Indeed the Republic has often guaranteed foreign investments jointly and severally with local participants consistent with its efforts to create a favorable climate for such investments.

 

TAX PRIVILEGES

Personal effects, household goods and furniture can be imported duty free by immigrant retirees, provided they are for personal use and have been used for a reasonable period of time - approximately one year. Also, there is no duty on a car, and retired couples enjoy the additional concession of two duty free cars.

 

COMMON EXPENSES

These are usually payable monthly or quarterly in advance. They vary from development to development and depend on the area and type of the property. They cover an owner’s share of the cost of cleaning and maintaining common areas and gardens, swimming pool expenses, electricity in common areas, management fees, rubbish collection and repairs. The estimated total is in the region of EURO 150 - EURO 1000 per year. 

 

ELECTRICITY AND WATER SUPPLY & OTHER MUNICIPAL SERVICES

Charges for utilities are payable to the respective authorities at regular intervals throughout the year. They are based strictly on consumption of each unit. While the cost will vary for every unit, approximately EURO 200 per unit per month can be considered as a rough guide, although it can go up to 500-600 per month and more.

 

The local municipal or other authorities are responsible for the regular collection of rubbish. Depending on the area of the property the cost is from EURO 85-150 per year.

 

INSURANCE

Comprehensive insurance against fire and associated hazards is usually provided by the seller (although it depends on the agreement of the parties), until the title deeds are transferred to the owners.

 

FINANCING FACILITIES

Many construction companies offer various long term payment schemes to assist its purchasers. Though each project differs, a deposit of 30%-40% is required on signing a purchase agreement for a completed building and the balance can be paid in 84-144 consecutive monthly installments at 9% interest on the reducing balance.

 

There are also schemes for purchasing property during the construction period or before. Additional information will be provided on request. In addition we may assist you to obtain from a Commercial Bank in Cyprus a housing loan at favorable conditions.

 

BANK GUARANTEES

Many construction firms may issue, if required a bank guarantee as security towards the purchase of property until the issue of the title deed. The relevant cost will be borne by the purchaser.

 

TAX ADVANTAGES

Retirees drawing a pension are exempt from withholding taxes at source, and may be taxed at the nominal rate of about 4% or less depending on income.

Additionally, Cyprus has Double Taxation treaties with many European and other countries, safeguarding its residents from paying tax in both countries.

 

RESIDING IN CYPRUS

Non-Cypriots wishing to reside permanently in Cyprus must apply to the Committee of Aliens Control. To obtain residence permission a Non-Cypriot should fall in the following categories:

 

CATEGORY A: In this category are included people who have already an offshore company in Cyprus.

 

CATEGORY B: In this category are included self-employed foreigners who are interested to open their own business in Cyprus on the condition that their operations will not have negative impact on the economy of Cyprus. Additionally the minimum capital required is CY£50.000, depending on the activities of the company.

 

CATEGORY C: In this category are included Non-Cypriots who are interested to be employed in Cyprus by a Cypriot employer. Permission is granted on the condition that their employment will not lead to an increase in the local unemployment in the profession they will practice.

 

CATEGORY D: In this category are included foreigners not employed in Cyprus however would like to reside permanently in Cyprus. Permission will be granted on the condition that they have received from abroad and is no less than £CY3.800. 

 

Non-Cypriots wishing to take up employment in Cyprus are required to have a permit under the Aliens and Immigration Law.

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