Useful Tips Before Buying Property In Cyprus
The Cyprus Land Registry Department
The Cyprus Land Registry system in Cyprus was based on British standards and was established in 1875. Throughout the years it has become one of the most sophisticated land registry systems in the world. So you do not need to worry since purchasing property in Cyprus is an easy and 100% safe procedure.
Your Permission To Purchase Property In Cyprus
Your 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. 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. Peppianna Team undertakes to submit the application on client’s request.
Do You Need Financing For The Purchase Of The Property
Peppianna Team can arrange for you different 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%. Financing can be arranged from banking institutions abroad. All commercial banks in Cyprus are authorized to offer mortgage facilities to assist in the purchase of property. The loan will be in any currency.
The amount ranges from 60%-80% of the value of the property with a repayment period ranging up to 25 years depending on the policy of the bank and the currency of the loan. Easy terms of payments and long-term in-house finance schemes are also available.
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.
The Legal Costs Incurred After Purchase
If you may request advise from an experienced property solicitor (we know few) before signing a contract of sale, the fees might range between £500 and £1200, payable on signing the contract, to the solicitor.
Property Duties And Other Costs
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 of property (CYP) | Transfer fee rate(%) |
| Up to 50,000 | 3 |
| From 50,001 to 100,000 | 5 |
| From 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.
The following example clearly illustrates this:
For property purchased for CYP 70.000 in one name, the fees payable are CYP 2.500.
| For Property in one name | ||
| Up to CYP 50,000 | @ 3% | = CYP 1.500 |
| The remaining CYP 20,000 | @ 5% | = CYP 1.000 |
| Total fees payable | = CYP 2.500 | |
For property purchased for CYP 70.000 in the names of two persons, the fees payable are CYP 2.100.
| For Property in two name | ||
| First CYP 35,000 | @ 3% | = 1.050 (husband Share) |
| Second CYP 35,000 | @ 5% | = 1.050 ( wife share) |
| Total fees payable | = CYP 2.100 | |
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 2008.
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 the Developer 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 the Developer will be cancelled and a new one will be issued between the Developer and the new purchaser. Cancellation fees are charged to the seller at CY£1.500, covering cancellation fees and expenses.
Invest In Cyprus Without Any Fear! Peppianna Experts Are At Your Side Always!
