Buying Cyprus property can be both exciting and ‘scary’ at the same time. That’s why we are here to help you make the right decisions to make that safe and secure purchase. We have expert knowledge of the Cypriot property market and rules and we will guide you accordingly. We only work with the top, trusted professionals to make sure all angles are covered. Advice is free and no obligation, what have you got to lose, call us today.
General
Since Cyprus joined the EU in 2004, there are no restrictions on the number of properties or pieces of land (or size of the land) that EU nationals may own in Cyprus. Non-EU nationals are allowed by law to acquire the title to only one property on the island.
Approval of the Council of Ministers is needed to acquire immoveable property in the case of EU nationals who are not resident in Cyprus and who purchase a second home here, and in the case of non-EU nationals resident outside of Cyprus who purchase a property here. Approval is, these days, really just a formality.
The legal system in Cyprus is based largely on the British legal system, although the property laws and purchase procedures do differ widely. Legal fees and costs are very reasonable and tend be much lower than in many other European countries.
Lawyers
It is always wise to consult a lawyer in connection with any legal matter although it is not imperative in the purchase of a property, but we strongly recommend you speak to an independent lawyer. Some property developers have their own pre-printed Contract of Sale but, for peace of mind, it is advisable to engage the services of a reputable lawyer. Ask around or use one from personal recommendation. Fees vary so always ask at the outset what the charges are likely to be. Lawyers work on your behalf to ensure Building and Planning Permits have been granted to the developer and will make all necessary searches in connection with your proposed purchase.
Reservation Agreement
Once you have found the property you want to buy, a reservation deposit of, usually, €3,000 – €4,000 is paid. The property is taken off the market for a specified time. Within the reservation period, the appointed lawyer will carry out an investigation at the Land Registry office to ensure that the vendor is the owner of the property/land. The reservation deposit is, as a rule, non-refundable.
Contract of Sale
This is a legally binding agreement which sets out who the vendor is, the name of the purchaser, the type of property purchased and the project/location along with any additional alterations to the original plans or ‘extras’ that have been included in the agreed sale price. Terms of payment are also laid out in the contract. Once all parties are in agreement, it is signed and the lawyer then has a duty to present it to the Land Registry Office. Stamp duty is payable at this time at the rate of 0.15% on the first €170,860.14 , and 0.20% on any amount above this.
Title Deeds
Title Deeds are issued by the Land Registry once a project has been completed, and inspected and approved by the various governmental bodies. This process may take some considerable time owing to the huge volume of applications. Once you have been notified the deeds are ready, there is a fee to be paid called the Land Transfer fee. This is calculated on a sliding scale based on the market value of the property at the time of purchase.
The fee for property valued at up to €85,430.07 is 3%;
the fee for property valued between €85,430.08 and €170,860.14 is 5%;
and the fee for property valued over €170,860.14 is 8%.
Use this calculator to work out the amount.
Currently there is a 50% discount on transfer fees. (Although this could change later)
This figure can be significantly reduced if more than one name appears on the Contract of Sale.
Until such time as the title deeds are available for issue, purchasers can feel safe about their investment as long as their lawyer undertakes the following:
– Makes a search to confirm that the land on which the project is free of any encumbrances
– Ensures that stage payments are in accordance with the progress of the work, and
– The Contract of Sale is stamped by the Tax Office and lodged with the Land Registry for ‘Specific Performance purposes’.
Once the Contract of Sale has been deposited with the Land Registry, a developer does not have the right to transfer the title deeds into the name of any person other than the purchaser’s, and neither the developer nor, indeed, any other third person, is allowed to lodge a mortgage against the property. The purchaser’s right to become the registered owner of the property is, therefore, fully secured.
Selling a Property without Title Deeds
This is a simple process but it does incur fees. A charge is made for cancellation of the original Contract of Sale and issue of a new contract. Charges are usually stipulated in the Contract of Sale. If not, then there may be a fixed fee or % value of the property payable.
Taxes
Immovable Property Tax
Immovable Property Tax (This has currently been suspended from 2017, new legislation may change)
Municipal Tax
Municipal tax is the tax paid to the local authority for refuse collection and street lighting/cleaning. The amount payable varies from municipality to municipality. This varies from town to town, but an avergare id about €300 pa, which is considerably less than UK council tax.
Inheritance tax
There is no Inheritance Tax in Cyprus.
Capital Gains Tax
Capital Gains Tax is payable at the rate of 20% on the profit following the sale of a property after the following deductions have been made :
– the first €17.086.14 (per person)*
– a figure for inflation
– transfer fees
– Estate Agents fees (providing the agent is registered)
– Legal fees, and
– the cost of any additions to the property (provided receipts can be produced).
* If the property sold has been the home of the Vendors for at least five years, the allowance is €85.430.
Value Added Tax – VAT
The rate of VAT on the selling price of a property in Cyprus is 19% (as of 13/01/2014). No V.A.T. is payable in cases where an application for a Planning Permit was submitted before 1st May 2004. For land/building plots purchased prior to 1st January 2008 there is no VAT.
Claiming Back VAT
It is possible to claim back some of the VAT paid on a property, if the application for the building permission was submitted after 1 May 2004. You need to be over 18 and a Cypriot citizen, or a national of a member state of the European Union who is permanently residing in the Republic of Cyprus and who has no other property in Cyprus that is used as a permanent residence. The building must be new and used for the first time, with the total area not exceeding 250 sq.m., with some allowances. The amount of VAT refunded depends on the type and size of the residence.
The process takes up to three months. The purchaser is obliged to remain in and to use the property as their main and permanent home for a period of 10 years for the refund to be granted. If the purchaser decides to buy or build a new residence, they may again be eligible for a refund of VAT on the new property.
An application form must be submitted, accompanied by the relevant documentation to: Permanent Secretary, Ministry of Finance, Grants and Benefits Service, 1489 Nicosia
Residence Permit
If you are planning on spending more than 90 days per year in Cyprus, you must apply for a Residence Permit even though Cyprus is in the EU. You are required to go to the Immigration Department before the expiry of the 90 day period to make an appointment to start the process of gaining an MEU3. The required paperwork includes the following: copy of passport, 4 x passport size photos and a copy of your Contract of Sale. If you are under state pension age and effectively retired, you will need proof of income and evidence of private Medical Insurance. The Immigration Department will advise you exactly which documents you will need to take with you to your appointment.
Work Permits
As Cyprus is now in the EU, work permits are not required for any EU citizens who wish to take up employment or start up their own business. Certain formalities must, nevertheless, be observed. Non-EU nationals intending to work in Cyprus require a work permit as well as a visa. In order for a permit may be issued, the Ministry of Labour must be satisfied that a Cypriot or an EU citizen is not available for the job. When granted, a permit usually lasts for three months or a year.
Utilities
Water bills are paid at the Municipal offices or via standing order/direct debit from your bank. A deposit is required for connection which is refundable upon departure from the property. A standing charge is payable on top of consumption costs. Electricity operates in a similar manner. All gas on the island is bottled – there is no mains gas supply at this time although offshore exploration is in progress.
Communal Expenses
These are incurred when a property is purchased on a managed development with communal areas. The amount payable (usually twice a year) is based on the square metres of the property and the amenities available. Costs can vary quite considerably.
Building Insurance
Building Insurance is payable to the developer for managed developments until such time as the title deeds are issued. Premiums are based on the square metres of the property. Once title deeds are issued, the property owner is free to organise their own insurance.
Contents Insurance
Upon delivery of the property, it is advisable to take out contents insurance. There are many companies from which to choose. We can advise you which are the most popular ones.
Cypriot Wills
It is advisable to make a Will if you are a full time resident in Cyprus otherwise upon death, property and estate automatically passes to the Government. We strongly suggest you consult a lawyer who will be able to advise what is best for you in light of your personal circumstances.
Under Cyprus Law there is a system of forced heirship. For example, if a person dies leaving a spouse and a child then u00be of the estate passes to the spouse and child in equal shares and the testator (the person making the Will) has the freedom to dispose of the remaining quarter share as they wish. However, under Cyprus law currently, there is a concession for persons who/or whose fathers were born in the UK or in a Commonwealth country. Providing they have made a Will, such persons are allowed, on their death, to leave their Cyprus assets to whomever they wish.
