Purchasing a home overseas for holiday, investment or permanent residence is perhaps the most important financial decision in a lifetime and a major commitment.
Residential Permit
Residential Permit is easily obtained for persons living in Cyprus , who have purchased property.
Temporary Permit The granting of this permit requires the existence of a bank account in Cyprus and a sales agreement of the property purchased. Temporary residence status can be from one to four years.
Permanent permit In addition to the above requirements, the applicant must establish evidence of a secured annual income of not less than CYP 5.600 per person plus CYP2.700 for each dependant person. (Because of the entry of Cyprus to the EU, it is possible that for Europeans the law in respect of permits will change.) For more information please contact the Ministry of Interior, Nicosia.
Property Ownership
In comparison to many other countries the process of purchasing property in Cyprus by foreigners is very simple.
Non Europeans are entitled to a freehold ownership of a villa, an apartment or a piece of land, with maximum allowed extend of 4014 sq.meters (four thousand and fourteen square meters).
Europeans are entitled to a freehold ownership of a villa or an apartment. The above restriction, in respect of Europeans, will hopefully soon be abolished because Cyprus entered the EU. It is very possible that such a change in the legal system will increase demand of real estate sharply with the related reflection on property prices. In respect of plots of land, Europeans can purchase as many and for any extent. This was one of the changes which took place because of the entry of Cyprus to the EU.
Foreign companies can acquire premises for their business or for holiday home for their directors.
Europeans who acquire permanent or temporary permit can register in their name as many properties as they want provided that they sign a confirmation to the government that they will stay for the following five years in Cyprus .
Properties in Cyprus are on average 20% - 30% lowe r in prices than Portugal , 30% - 40% lower than Spain and 50% - 60% lower than Italy and France .
Important Information
As in most other countries, there are many regulations regarding buying a property in Cyprus and it can be a lengthy process. The law regarding buying property in Cyprus has changed since 13th June 2003.
These are the points from the District Officer in Cyprus . Note these can change at any time.
• Non Cypriots and non residents of Cyprus require the permission of the Council of Ministers to purchase immovable property in Cyprus .
• Only under exceptional circumstances will permission be granted to buy more than one property. (There is a way around this, discuss with lawyer)
• Non Cypriots/residents are not allowed to rent their property to tourists but may rent them to permanent residents of Cyprus
• A permanent resident is undefined as yet but previously it was someone who resided in Cyprus for more than 10 years.
• It is important you check with your lawyer any of the above regulations which are subject to change at any time.
Your conveyance contract is filed with the Land Registry within two months of being signed, thus preventing the vendor from selling the property a second time.
In terms of Mortgages, it is generally permitted to borrow up to 70% of the lower valuation and purchase price for between 5 and 15 years. The minimum loan is usually around CYP25, 000.
Title Deeds
Following the settlement of the agreed selling price, the title deeds are transferred to the buyers name as soon as they are issued from the Land Registry.
Tax Advantages
Legal safe guards – The legal system in Cyprus is largely based on the British system and safe guards the rights of purchasers in many ways. Most important, for the purchasers protection the Cyprus land registry provides a simple and effect legal "instrument specific" performance". Once the contract of sale is signed and deposit paid, the contract is registered at the land registry. This procedure protects the ownership rights until the title deeds are issued and transferred to the buyer's name. The contract in the hands of the land registry can not be withdrawn by anyone, the property can not be leased, sold, transferred or mortgaged. The purchaser can only alter this status.
Taxes
Real Estate Transfer tax-fees are necessary in order to transfer FREEHOLD ownership to the name of the purchaser. The transfer fees will be paid when the transfer of the title deed in the name of the purchaser will take place. The Purchaser is responsible for the tax payment. The rates are on a graduated scale.
|
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 |
Stamp Duty
The purchaser is liable for the payment of stamp duty at the rate of CYP 1.50 per thousand up to the value of CYP 100,000. Thereafter the rate is
CYP 2.00 per thousand. This should be paid within 30 days of signing the contract.
Immovable Property Tax
With regard to the purchase of immovable property in Cyprus, Central Bank approval is required on the transfer of property to aliens. Such approval is granted if it can be proved by the applicant that funds for the purchase were imported from abroad. Note that without the approval, on a subsequent sale, permission to remit the proceeds out of Cyprus will not be allowed.
The annual immovable property ownership tax is based upon the value of the property. Every registered owner whose property exceeds CYP 100,000 must submit a declaration of immovable property and pay the respective tax every year before 30 September.
|
Value of Property |
Annual Property Tax |
|
Up to 100.000 |
exempt |
|
100.001 to 250.000 |
2,0 |
|
250.001 to 500.000 |
3,0 |
|
Over 500.000 |
3,5 |
Local Authority Taxes and Rates
A rough guide could be approximately CYP 50 –150 per year depending on the size of your property. This tax is for refuse collection, street lighting, sewerage, etc.
The basic utilities, electricity, water and telephone are payable individually in accordance with the consumption and based on a meter reading.
Capital Gains Tax
On disposal of a property, capital gains tax will be payable at the rate of 20% on the gain with the first CYP10,000 being exempt for each person.
On top of this allowance, the seller is entitled to a further allowance regarding the transfer fees paid, inflation rate per year and the cost of any additions made to the house.
Gains room the disposal of a dwelling house are exempt up to CYP 50,000 in total if the owner resides in it continuously for at least five year prior to disposal.
Income Tax
There are two groups of taxed income, as follows:
- Those that have income from other sources other than pension, are entitled to pay 5% income tax, exempt the first CYP 2,000.
- Those that have income from their pensions are entitled to pay 5% income tax, exempt the first CYP 6,000.
The Future Property Sale
Because Cyprus is an attractive holiday destination and secure investment option, property can easily be resold.
Duty Free PrivilegesEuropeans who become permanent residents in Cyprus and were using in their country a car for at least six months, can bring their car to Cyprus and they will not pay import tax.
Furniture can be imported free of any taxes by Europeans or Non-Europeans who become permanent residents provided that they are for personal use and are not brand new.
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