A Guide to Buying Property in Cyprus

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
5 000 (five thousand three hundred Cyprus pounds) for a couple.

Property ownership

Compared to many other countries the process of purchasing property in Cyprus by foreigners is very simple.

Non-Cypriot buyers are entitled to a FREEHOLD ownership of a villa, an apartment or a piece of land, with maximum allowed extend of 4014 m2
(four thousand and fourteen square meters).

Offshore entities may also acquire premises for their business or for residence of their foreign employees. Properties in Cyprus are on average 20% - 30% lower in prices than Portugal, 30% - 40% lower than Spain and 50% - 60% lower than Italy and France.

Mortgage Finance

All commercial banks in Cyprus are authorized to offer mortgage facilities to assist in the purchase of property.

The loan will be in foreign currency.

The amount ranges from 60%-80% of the value of the property with a repayment period ranging up to 20 years.

Easy terms of payments and long-term in-house finance schemes are also available.

The Title Deeds Transfer of ownership from Vendor to Purchaser is undertaken by a simple procedure through the Cyprus Land Registry Office, either by the buyer in person or by appointing a third party with Power of Attorney.

The transfer of ownership requires two permits:

a) are from the Council of Ministers, and

b) are from the Central Bank of Cyprus.

Both permits can be easily obtained from the Cypriot authorities

VAT Since Jan 2003 a revised flat rate of 15% was introduced on goods & services. Real Estate is excluded from VAT as are most food items, medicine and other essentials.

Tax Advantage

Cyprus is unique when it comes to the taxation aspects of living on the island.

Retirees who become residents in Cyprus are taxed on their pensions from abroad at the rate of 5% for amount: exceeding £2,000 annually.

Of course as for all Cypriot tax residents their total annual income up to £9,000 (£10,000 from 2004) is tax exempt.

Additionally, Cyprus has Double Taxation treaties with many European and other countries, safe-guarding its residents from paying tax in both countries. This gives the option to the citizens of those countries to take advantage of the very low rate in Cyprus.

Double taxation agreement

Cyprus has double-taxation agreements with Austria, Bulgaria, Canada the People's Republic of China, the Czech Republic, Denmark, Egypt, France, Germany, Greece, Hungary, India, Ireland, Italy, Kuwait, Malta, Norway, Poland, Romania, Russia, (Armenia, Belarus, Kurdistan, Moldova, Tajikistan, Turkmenistan and Ukraine) Slovakia, South Africa, Sweden, Syria, the United Kingdom, the United States, Yugoslavia (Serbia and Montenegro).

The main purpose of these treaties is the avoidance of double taxation of income earned in any of the above countries. A credit is usually allowed against the tax levied by the country of the tax payer's residence for taxes levied in the other country

Duty Free Privilege

There is no import duty on cars and for retired couples there is an additional concession of two duty free cars.

Personal effects, household goods and furniture can be imported free of any taxes by immigrant retirees provided they are for personal use (and have been used for a while) or - and are not brand new, indicating prior usage.

Real Estate Transfer tax-fees are necessary in order to transfer FREEHOLD ownership to the name of the purchaser. This can be done as soon as the relevant Government Authority has issued the title deed and the purchase has been completed. The Transferee is responsible for the tax payment. The rates are on a graduated scale.

Value of property CY Pounds (CYP) Transfer fee rate (per hundred %) Up to 50,000 3% From 50,001-100,000 5% From over 100,000 8

For example if the purchase price is CYP 70 000 The first CYP 50 000 3% = CYP 1 500 next CYP 20 000 5% = CYP 1 000 CYP 2500 Should the purchase be made in joint names (provided the price is more than C£ 50 000) the effective value for calculation is halved. For example if the purchase price is C£ 70 000, The first CYP 35 000 3% = CYP 1050 next CYP 35 000 3% = CYP 1050 CYP 2100

Closing Costs in Cyprus

It goes without saying that you should employ an English speaking lawyer who can advise you on your home purchase. The legal system is similar to that in England whereby your solicitor will perform all necessary searches on the property, ensure it is free of charges and has the necessary planning and building permission.

In addition he will confirm the contract for purchase is fair and legally correct.

In addition to the normal legalities associated with property purchase your lawyer will secure a permit from the Council of Ministers allowing the registration of the property in the name of the purchaser and secure the Central Bank Certificate allowing registration. These are mere formalities and do not affect your right to occupy the property. With accession by Cyprus to the E.U. all previous regulations regarding the amount of property a foreign national could acquire has been lifted. Legal fees should be in a range of € 1,296 to € 1,728.

Stamp Duty Transfer tax:
Stamp Duty is a one-off payment levied according to the value of the property and paid to the tax authorities within 30 days of signing the sale agreement. The rate up to the first € 172,818 (CYP 100,000) of the purchase is € 2.59 (CY£1.5) per thousand and thereafter € 3.45 (CY£2.00) per thousand.

Transfer Tax:
Real Estate Transfer Tax (RETT) is paid to the Land Registry Office when the Property is transferred into the purchaser's name. The Rates are:
Value up to € 86,415 (CY£ 50,000): 3 %
€ 86,416 - € 172,818 (CY£ 100,000): 5 %
€ 172,819 - and over: 8 %

Other Taxes to Consider
The Cypriot government abolished inheritance tax years ago. This is a huge benefit for those inheriting your estate. Capital Gains tax is levied at a rate of 20% on the profits made from the sale of your property. In practice this means the difference between the purchase cost and sale price achieved, less an indexation allowance and the cost of any improvements. There are also other generous exemption allowances in place.

Capital Gains Tax

On disposal of the property, capital gains tax will be payable at the rate of 20% on the gain with the first C£10,000 being exempt for each person. There is also an indexation allowance.

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 from 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 years prior to disposal.

Stamp Duty

The purchaser is liable for the payment of stamp duty at the rate of 1.50 CY Pounds per thousand up to the value of 100,000 CY Pounds and thereafter at the rate of 2 CY Pounds per thousand.

For example if the purchase price is CYP 150 000 The first CYP 100 000 .0015‰ CYP 150 Next CYP 50 000 .0020% CYP 100 CYP 250

Estate Duty tax has been abolished as from the first of January 2000 (Law number is 78(1)/2000).

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.

Selling your property

In the event that the purchaser should wish to sell a property at some time in the future, the funds / profits from the sale can be repatriated easily to the value of the purchase price including any amounts spent on improvements and/or additions to the property. Profits can also be repatriated plus the interest earned.

Both Permits can easily be obtained from the Cypriot authorities.

The above rules and costs may vary from time to time. It is important to use the services of an independent lawyer. Please request your lawyer to supply you with the up to date situation on purchasing property.