Buying Real Estate in Cyprus

It is widely accepted that buying immovable property is the best investment can anyone make.

Cyprus attracts both investors and those looking for a stunning and sunny place to live, work or retire.  Due to relatively low cost of living, the high quality of lifestyle and high standard of living, the attractive climate, the knowledge of English language by the vast majority of the population, secure and safe environment for the family, the high standard of education across all sectors, the favorable policy to obtain a permanent residence permit by acquiring a Property in Cyprus and the highly successful Citizenship by investment programme, the lowest corporate tax rate 12,5%, Cyprus has always been considered to be an increasingly popular destination by foreign buyers.  

About Cyprus

Geographical Location: Located at the crossroads of Europe, Africa and Asia – 3rd largest island in the Mediterranean Sea

Capital: Nicosia

Other main cities: Limassol, Larnaca, Paphos, Famagusta, Kyrenia

Language: Official – Greek and Turkish, English widely spoken

Population: 1,172,071 (2015 est.)

Legal System: is based on common law English Legal System and EU law.

Member: United Nations, European Union, Eurozone, Commonwealth and Council of Europe.

Currency: Euro

Time zone: UTC +2

Airports: Larnaca and Paphos International Airport

Ports: Limassol Port

Drive: Left side

Telephone Country code: +357

The right of ownership of immovable property in Cyprus is very well protected by the Cyprus Constitution and is among others one of the fundamental human rights.

The Law

The law governing the acquisition of immovable property in Cyprus by foreigners is the Cypriot Acquisition of Immovable Property (Foreigners) Law, Cap. 109 of the Laws of Cyprus (hereinafter referred to as “the Law”), as amended from time to time. The Acquisition of Immovable Property (Aliens) Law 54(I)/2003 came into force on 1/5/2004, the date of Cyprus’ accession to the EU, and brought about some changes to the old policy relating to the acquisition of immovable property.   

Who can buy and what are the Conditions?

• Acquisition of property by EU nationals

No restrictions apply for nationals of any Member State of the European Economic Area (‘EEA’) (the EU, plus Iceland, Liechtenstein and Norway) that reside permanently in Cyprus. Property in Cyprus can be purchased by signing the contract of sale between the vendor and the EU national – purchaser as all restrictions for EU nationals (whether or not resident) have all been lifted by 2009.

• Acquisition of property by non-EU nationals

Third country nationals (non- EU) or companies or Cyprus companies owned or controlled by non EU nationals are allowed to purchase one of the following for personal use:

– one apartment or

-one house or

-building plot or land up to 4012 square meters (three donums) for the erection of only one house for use as a residence only by the purchaser and his family

A permission of the Council of Ministers must be obtained by non-Eu nationals to acquire a property in Cyprus and transfer the title deed of that property on their names. This permission is granted more or less as a matter of course to all bona fide purchasers.

As of May 2013 the Ministry of Interior has allowed ownership of up to two properties, which can be two residences or one residence and commercial premises with a floor area up to 100 sq.m.

Requirements/Conditions/Restrictions:

• No criminal record of the applicants in their country or in Cyprus
• Their financial standing is satisfactory (an income of €.25.000.- per annum between the couple is usually acceptable)
• Transfer of title deed must be completed within a year from the issuing of the permit or within three years in case of constructions of a building on the property.
• All taxes must be paid in full.
• For specific property and use only the permit is issued.

Application to the District Office

An Application for permission is made to the District Office of the district where the property is situated in accordance to the Acquisition of Immovable Property (Aliens) Law Cap. 109. 

There is no restriction in taking possession of the property in the meantime even though it takes about 15 days or maybe longer for the application to be issued.

Application to the Land Registry Office

Application to the Land Registry Office is made to acquire the title deed of the property. The following documents are needed to be submitted with the application:

1. Application Form N207
2. The registration deed of the property.
3. Copy of the District’s Office approval.
4. Evidence of payment of all the property taxes to date.

All the parties (Seller and Purchaser) must be present at the Land Registry Office otherwise may give Power of Attorney to their lawyer to appear on their behalf.

When application is issued, the title deed will be registered at the name of the buyer. A title deed is therefore the proof of the registration of ownership held in the records of the Land Registry Office.

TITLE DEEDS:  includes the name and address of the owner, the location of the property, the city, the share of the owner, the registration number of the property, the plot number, Sheet/Plan, the type of the property (field, house, apartment etc) and the dimensions of the property in square meters.

Seek Professional Legal Advice and Assistance

When you decide to acquire a Property in Cyprus, it is wise to seek professional legal advice. The Lawyer of the Purchaser will usually verify the ownership of the property by the seller and further carries out an official search at the Land Registry to confirm the registration of any encumbrances or charges over the property and also the availability of all necessary permits with reference to buildings erected thereon.

The Purchaser may appoint qualified engineers or surveyors to carry out structural or other surveys to verify the market of the property.

After proper investigations are conducted, a contract of sale is executed between the parties so that they are legally bound to complete the transaction. The terms of the agreement are negotiated in a fair and balanced way and the necessary formalities are complied in accordance to the law and regulations.

The Contract of Sale sets out the parties, description of the property, the amount of the purchase price, the mode of payment, completion date and may include warranties and/or contractual representations.

Stamping the contract in accordance with the provisions of the Stamp Law and depositing it at the Land Registry Office under the Sale of Immovable Property (Specific Performance) Law 2011 avails the buyer with the additional protection of a specific performance order which gives the right to enforce by a Court Order the Vendor to transfer the property into the name of the Purchaser if the Vendor fails. Registration of the Contract of Sale with the Land Registry Office prevents the Vendor from transferring the property elsewhere or encumbering it for as long as the contract is valid and legally effective.

Within 6 months of signing the Contract, the same must be filed at the Land Registry Office.

The purchaser is responsible for paying the stamp duty and transfer fees.

Stamp Duty

A Contract of Sale must be fully stamped by the Tax Office and then may be lodged in the Land Registry Office for specific performance purposes fully stamped by the Tax Office. The Contract should be stamped within 30 days of its signing. The rates are as follows:

Contracts

For contracts up to €5,000 there is no stamp duty available.

€5,001 – €170,860  ——-> 0.15%

€170,861 – €8,543,000 –> 0.20%

Over €8.543.000 €17.086

Transfer fees

The transfer fees payable to the Land Registry Office depend on the value of the immovable property, not always on the exact amount paid by the purchaser (purchase price) but are calculated on the market value of the property as at the date of the transfer.  The transfer fees are payable at the time the transfer is effected.

The rates are as follows:

Value of Property € Transfer fees rate % Accumulated Tax €

0 – €85,430.07 — 3% —2,562.90

€85,430.08 – €170,860.14 — 5% — 6,834.40

over €170,860.15 — 8%              

                       .

As a result of special measures introduced by the Government to further revive the property market, for transfers that take place before the 31/12/2016:

1. No Transfer fees are payable, if VAT was paid on the property

1. Transfer fees are reduced by 50% if VAT was not paid on the property

Other taxes

• VAT (Value Added Tax): The rate of VAT is 19%.

1. VAT is chargeable at the standard applicable rate on the first sale of new buildings or the land on which they stand if the application for a planning permit was submitted after 1/05/2004.
2. No VAT is charged on subsequent sales or on the sale of undeveloped land or the leasing or letting of a property.
3. 5 % VAT applies to both EU and non-EU Nationals who purchase property for use as their primary and permanent place of residence for the next 10 years. This rate applies for the first 200 sq.m. of residences with a total covered area of up to 275 sq.m. to Contracts concluded from 1/10/2011 onwards for the acquisition or construction of residences.

• Immovable Property Tax

Tax is imposed on the owner of immovable property in Cyprus as at 1st January every year. It is calculated on the market value of the immovable property on the 1st of January 1980 and is payable by the September in the year. The tax rates are as follows:

• Local Authority Tax: Property taxes levied by the local authorities are payable annually and may vary, depending on the size of the property. The tax covers the cost of garbage disposal, street lighting, etc.

• Inheritance Tax: There is no inheritance tax in Cyprus

• Capital Gains Tax: Capital Gains Tax is the tax imposed on gains from disposal of immovable property situated in Cyprus including gains from the sale of shares of companies which own immovable property situated in Cyprus. The capital gains tax is calculated on the balance at the rate of 20%. The first €17.086 (or €85.430 in the case of private residence for at least five years prior to disposal) is exempt. The capital gain is calculated after deducting from the sales proceeds the original cost and any additional expenditure, adjusted for inflation(calculated by reference to the Retail Price Index issued by the Department of Statistics every month), and any allowable expenses directly related to the disposal of the building such as interest on loan and advertising. These deductions are granted once only.

PLEASE NOTE:

Capital Gains Tax Law has been amended to provide for an exemption from Capital Gains Tax on gains from the disposal of immovable property which is acquired between the date the amendment law comes into force(17/07/2015) and 31/12/2016, provided that:

1. The property consists of buildings
2. It is acquired from an independent third party
3. It is not acquired through an exchange of property or through donation/gift.

General Guidelines

Our guidance to potential buyers is that they must obtain legal advice and advice from a reliable property consultant. The complexity of the legislation and regulations relating to the acquisition of immovable property in Cyprus renders it necessary to seek at the outset professional legal advice in order to avoid any adverse consequences that could arise where sufficient care is not taken.

We would be glad to provide you with the appropriate legal advice and please do not hesitate to contact us.