WHAT YOU NEED TO KNOW ABOUT BUYING A PROPERTY IN CYPRUS!

A) Foreigners not residing in Cyprus can buy and acquire the Title Deed to only one property on the island, (house or flat).

For this purpose, they will need the approval of the Council of ministers (just a formality).

For Europeans, there is no restriction on the number of pieces of land or on the size of land they can buy.

Use of a local solicitor is advisable.

Investors and/or buyers can rely on the information and results of searches given by the Land registry.

B) According to the immovable property Acquisition (Aliens) Law Cap.109, as amended by laws 52/69, 55/72, 50/90 and 54(1)/03, approval to acquire immovable property is no longer required (Since 1st May 2004,when Cyprus became a member of the European Community), in the following cases;

1) For a citizen of a member state of the E.E.C. who has his/her permanent home in the Republic of Cyprus.

2) For a company who is registered according to the law of a member state of the E.E.C. and which has, as per the Constitution, the Head Office, the central administration and the main establishment, in the Republic of Cyprus.

3) For a citizen of a member state of the E.E.C. who reside permanently in Cyprus in cases where he/she acquires property other than a secondary home (i.e. land).

C) According to article 2 of the immovable property acquisition (Aliens) law, Conditions, restrictions, requirements, criteria for the issue of the approval (Amended), Regulations 2004 K.D.P. 534/2004;

a. A physical person to whom a permit to stay in the Republic of Cyprus is granted, according to the conditions of article 7 and/or 11 and/or 18 and/or 30 and/or 37 and/or 57 of free movement and Residence of citizens of member state of the European community and of the members of their families, law (N92(1)/2003),is considered as having a place of permanent residence in Cyprus and

b. A legal person who is registered according to the law of a member State, means the legal person who has secured, according to the provisions of the company law, a certificate copy of the certificate of registration and/or the registered office of the company.

A person living permanently in Cyprus as per paragraph C(a) above can easily secure a certificate that he/she can use to acquire as many properties in Cyprus as he/she wishes.

D) Title deeds

a) It is wise to appoint a local solicitor. He must then make a search and if the results are satisfactory, contracts can be exchanged immediately. The vendor then provides the title deed without delay.

b) Purchasers of a property under construction, or just completed or part of a project, must follow a slightly different procedure and cannot acquire the Title Deed to their property immediately. The Title deeds to new properties, or to properties which are part of a project, takes approximately 3-4 years following completion, to be issued.

Purchasers can feel safe as long as they appoint a local solicitor

i) A search is made to confirm that the land on which the project is under construction, or has just been completed, is clear of any encumbrances.

ii) The contract of sale is stamped by the tax office and lodged with the island registry for specific performance purposes, (law cap 232 as amended by the laws 50/70, 96/72, and 51(1)/95).

The lodging of the contract with the land registry office (fee CYP 1.00) is very important because the property is then blocked and the vendor cannot sell it or transfer it to anyone else.

Neither can the property really be mortgaged by the vendor as the banks are not in favour of waiting in line.

In the unforeseen event that a Developer should suffer financial problems, the purchaser s must be satisfied first, then the banks. Hence it is in general, the policy of the banks to avoid the mortgage of the property by the vendor.
The lodging of the contract with the land registry office secures and restricts the amount payable for transfer fees which are payable when the purchaser acquire their title deed.

Contracts must be stamped within 30 days of signing otherwise a penalty is charged and added to the cost of the stamps .The contract must also be lodged with the land registry office within 60 days of signing ,failure to do so results in the right to lodge being lost, and the contract can then never be lodged.

E) Stamp duty
Before the contract is lodged in the land registry office for specific performance purposes, it needs to be stamped by the tax office.

Example: Buying a property for EURO 341,720
The stamp duty paid is EURO 598

F) Immovable Property tax (law 24/80 2002)
This tax is imposed on immovable property situated in Cyprus. The rates are as follows:

(i) Up to 170860 EURO (One Hundred Seventy Thousand Eight Hundred Sixty Euro) there will be no fees payable.

(ii) From 170861 EURO and up to 427150 EURO the fees payable will be 2.5.

(iii) From 427151 EURO and up to 854300 EURO the fees payable will be 3.5.

(iv) Over 854301 EURO the fees payable will be 4.0.

(c) Capital Gains

Immovable property tax is payable annually.

G. Capital gains tax
From the profit following the sale of a property ,the first 17086 EURO (per person), a figure for inflation, transfer fees, estate agents fees (provided the agent is registered ) and any additions to the property (provided receipts can be produced) are all free of tax. Capital gains tax is then charged on the balance at the rate of 20%.

If the property sold has been the home of the vendors for at least five years, 85430 EURO tax relief can be claimed.

H. V.A.T
The rate of V.A.T in Cyprus is currently 15%.

No V.A.T is payable in cases where an application for a planning permit was submitted before 1st May 2004.

I. Transfer fees
When purchasers acquire their title deed they must pay transfer fees to the government.

Transfer tax fees based on the value of the property, are payable by the buyer and are as follows: