Legalities and Costs Related To Purchasing
There are simple steps that need to be completed when completing a property purchase in Cyprus. Purchasing your new overseas property should not be a painstaking effort. By taking a look at each point listed here, you will be able to simplify the process of buying your new property therefore easing any anxiety you may have about your Cyprus purchase. This is just a basic listing, there may be more to consider depending on what type of property you are looking to purchase and sometimes having a real estate representative can open up the world of purchasing overseas with knowledge of all tax situations and savings opportunities that can be available to foreign purchasers.
| • | Title deed – the transfer of ownership from the vendor to the purchaser can be done by one simple procedure through the Cyprus Land Registry Office either by the buyer himself or by an appointed 3rd party with Power of Attorney. |
| • | Stamp duties and mortgage fees – In the case of a sales contract, the purchaser is liable for the payment of the stamp duty and is payable upon signing the contract of sale. |
| • | Transfer fees – Once the transfer of the property and the registration is in the purchaser’s name, the District Land Registry Office will charge Transfer Fees. These are based on the market value of the property at the time of purchase and can vary from 3% - 8%. They are charged accumulatively and are payable at the time of issue of title deeds. |
| • | VAT payable on property – Since Cyprus’ accession to the E.U, VAT must be paid when buying a house although in cases where there has been an application for a town permit filed before May 1, 2004, VAT will not be charged. |
| • | Immovable Property and Service Tax – This annual immovable property ownership tax is enforced by the government and is a minimal cost depending on the value of the property. |
| • | Capital Gains Tax – All property sales in Cyprus are subject to Capital Gains Tax at the rate of 20% on the gain although there is a minimum amount that is tax-exempt. |
| • | Other property taxes – These taxes are paid to the Municipality and depend on the size and value of the property as well as the location. It covers refuse collection, sewerage, street lighting and other such amenities. |
| • | Inheritance Tax – This tax is not imposed in Cyprus. It is advisable to have a will made in the event of death since heirs may be forced to pay tax in your home country for your property. |
| • | Legal safeguards for foreign investors – The contract of sale must be in writing and it is advisable to be registered at the District Land Registry within 60 days from the contract date. Cyprus has never been involved in the nationalization of any section of the economy or the expropriation of property owned by foreigners. |
| • | Tax privileges – Immigrant retirees to Cyprus can import personal effects, household goods, furniture and cars duty free. |
| • | Financing facilities – C4P offers various long-term payment options to assist purchasers in addition to obtaining a housing loan from the Commercial Bank in Cyprus. |
Permission to Purchase Property
The first thing you must do when entertaining the idea of purchasing a Cyprus property is to find out if you are eligible. Unless you are a Cypriot resident, you must apply with a written application to the Council of Ministers for permission to purchase a property or a home on this island. If you are a European national who is not a resident of Cyprus, you are eligible to buy all the land you want, but are limited to only 1 home or apartment. If you are a non-European national, you are still able to purchase approximately 1 acre of land and 1 house or apartment.
Fractional Property Ownership
For those who love the idea of a home in the Mediterranean sunshine but do not feel comfortable investing thousands of pounds on their purchase, Fractional Property Ownership may be the ideal solution. This type of purchase is typically reserved for aircraft and yachts but is also available for holiday homes such as 2-bedroom apartment. This is quite different from a timeshare property. Your name goes on the title deeds and you can own a quarter or half of a luxurious holiday property where as when the property grows in value, you reap the benefits.