Buyers Guide
Real estate buying process in Cyprus is quite simple and straightforward. The first aspect is of course locating a suitable property; if the property chosen is a resale then an offer price should be submitted to the vendor via the estate agent. If the offer being made is conditional to various stipulations like the inclusion of furniture for example, this should be made clear. At this point a buyer should secure the services of a solicitor in Cyprus who will conduct all the searches on the property and basically help with the buying process. Once the offer submitted is accepted by the person selling the property a small deposit is usually paid to take the property off the open market. At this stage the property buyer’s solicitor should begin title and land searches and draw up the purchase contract. As you generally only sign a single purchase contract in Cyprus the buyer should only sign it when all the checks have been conducted satisfactorily. The alternative is to sign a contract which is conditional to all searches being conducted satisfactorily. When it comes to contract closure both the vendor and buyer will sign the contract which will be notarised and submitted to the land registry in Cyprus. Upon this date the purchase price will need to be paid unless the buyer has bought preconstruction and then according to the terms of the contract, various stage payments will need to be made for the property throughout the build process. The buyer then has a month to make all taxation and fee payments and soon after signing the purchaser contract the buyer’s solicitor will apply to the Council of Ministers in Cyprus for the buyer’s right to own the property. This may sound back to front - shouldn’t the buyer have permission to own property before he buys the property? Well, because the application for permission is merely a formality 99% of the time and because the whole process can take many months it is always done after the buyer has actually purchased! Permission to buy property Permission to buy property must be sought from the Council of Ministers by written application, which must be submitted by the non-Cypriot purchaser after the agreement is signed. However, this permission is granted more or less as a matter of course to all bona fide purchasers. In the meantime, however, purchasers may take possession of their property without restriction. The application to the Council of Ministers to acquire immovable property in Cyprus can be made within a reasonable amount of time after signing the contract of sale. EU citizens that are permanent citizens in Cyprus do not require permission to buy any immovable property. Legal entities established in EU countries that hare their headquarters and registered office in Cyprus, do not require permission to buy any immovable property. Legal entities established in Cyprus and controlled by citizens of the EU require permission to buy immovable property in Cyprus as well as any other legal entities. Financing for the purchase of property Yes, you can get financing schemes through all banking institutions in Cyprus. The base rate of interest charged is specified by the Central Bank of Cyprus and currently is 5,5%. Also you can get financing from banking institutions abroad. Financing schemes for overseas buyers can be made on their local currency and allow repayment periods of up to 10 years or in Cyprus Pounds with repayment period of up to 25 years. Solicitor fees The fees might range between £800 and £1000, payable on signing the contract, to the solicitor. Property duties and other costs with the purchase of property in Cyprus Stamp Duty and Mortgage Fees: In case of a sales contract the purchaser is liable for the payment of stamp duty at the rate of 1,5 per thousand of the value up to £100.000. Thereafter the rate becomes 2,0 per thousand. The duties and fees are payable upon signing the contract of sale. Transfer Fees: The transfer of title can be effected 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 the purchase and are calculated as follows: Value up to CY£ 50.000 3% CY£ 50.001 - CY£100.000 5% CY£100.001 - and over 8% Transfer fees are charged accumulatively and are payable at the time of issue of title deeds (usually it is 3 – 5 years after final delivery of property). For properties owned by a couple, transfer fees are charged on the 50% of the property value for each, providing an advantage for any property value exceeding CY£50.000. VAT payable on property Since Cyprus accession to the E.U., VAT must be paid when buying a house. In cases though were an application for a town permit was filed before the 1st of May 2004, VAT will not be charged. For projects that the town planning application has been filed after the 1st of May 2004, VAT will apply on the sales price. VAT applied will have two rates, 5% for the first purchase of residence by permanent residents of Cyprus and 15% for any other purchase. For the purchase of land, no VAT will be applied until the year 2007. Capital gains tax Should the purchaser decide to sell the property at a later date, Cyprus Law allows the full amount paid for it in foreign exchange may be transferred abroad at the time of resale. The equivalent of the full purchase price and any increase in the 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 CY£10.000 of gain are tax-exempt. If a couple jointly owns the property, CY£20.000 of gain are tax-exempt. When you sell for the first time your private residence of which you were the owner for at least 5 years, then it is tax-exempt up to CY£50.000. Annual property tax Immovable Property Tax: The registered owner of the property is liable to an annual immovable property tax calculated on the market value of the property as at 1st of January 1980. This varies according to values between 0 – 4 CY£ per thousand. Average cost is CY£50 – CY£100 per annum, per unit. Other Property Taxes: There are taxes paid to the Municipality and depend on the size and value of the property. It covers refuse collection, sewerage, street lighting, etc. and it varies according to the area, from CY£50 – CY£150 per annum per unit property. Inheritance Tax There is no inheritance tax in Cyprus. Legal safeguards for foreign buyers Same as for locals, the contract of sale must be in writing and it is advisable to be registered at the District Land Registry within sixty days from the contract date. This protects the buyer’s rights to the property and provides additional safeguards. Also, when the title deed is issued (2 – 5 years after the completion of the project), it will be registered in the name of Cybarco Ltd and then it will be transferred to the buyer and recorded in the government archives. The government archives are confidential and will not be published or made accessible under any circumstances. Contrary to some other countries, where the purchase of property is linked with inherent risks, Cyprus has never been involved in the nationalisation of any sector of the economy, or in the expropriation of property owned by non-Cypriots, in line with the government’s efforts to create a favourable climate for such investments. Selling your property Provided that you have a valid contract and a purchaser. If the buyer wants to sell the property before the title deeds are issued, the contract between him/her and develper will be cancelled and a new one will be issued between developer and the new purchaser. Cancellation fees are charged to the seller at CY£1.500, covering cancellation fees and expenses.
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Buyers Guide
