Legal Considerations

Department of Land Registry

All property deals in Cyprus are recorded at the land registry, offering owners peace of mind and security.

The majority of Cyprus properties are freehold; leasehold properties are available, however they tend to be rare and are usually commercial.

Where a property has a title deed, the title is transferred from the name of the seller to the name of the new owner, and within a few days a new title is issued under the name of the new owner. Where the property is used as collateral to secure a bank loan, the title is held by the bank as guarantee until the loan is repaid, at which point the new owner takes possession of the title.

Where a property does not yet have a title deed (e.g. a new apartment block has a single title for the entire building; separate titles per apartment are issued after the building is completed and the property developer applies for separate title deeds), the contract between the buyer and seller is submitted at the land registry and serves as title until the final contract is issued. Submission of the contract guarantees the buyer that no one else can claim ownership to the same property. It also allows the buyer to sell the property to a third party, before the final title deeds are issued.

Legal involvement

Even though it is not a legal requirement in Cyprus to use a solicitor in a real estate transaction, it is advisable to use one, especially since the cost of advice from an experienced property solicitor is not prohibitive. Legal fees obviously range, depending on the complexity, the value and the firm, however one should expect to pay an average fee of about €1,000. Legal fees are usually payable on signing the contract.

Eligibility to purchase property in Cyprus

Owning property in Cyprus is a relatively straightforward process however, one must familiarise themselves with the local rules and regulations before finalising their decision to buy.

All citizens of the EU enjoy their full rights and privileges as EU citizens here in Cyprus, including the right to establish residency, buy property, work or open a business. They just have to complete an application form at the immigration office for formality purposes and they automatically receive residential permit. EU citizens that are permanent residents in Cyprus do not require permission to buy any immovable property.

Non EU citizens are also allowed to purchase property in Cyprus; however the procedure they need to follow is slightly different, but still easy. Applicants must prove that they have sufficient financial means to provide for themselves and their family. There is also a restriction as to the size of the property which must not exceed 4,014 m2.

More details on the issue should be provided by an experience solicitor who can also handle the necessary paper work.

Title deed fees

Property transfer fees are to be paid in one instalment to the Land Registry Office on the day the transfer of property takes place. In the case of new houses or apartments, the buyer should expect to pay these fees in three to five years after final delivery of the property. These fees are the responsibility of the buyer and are based on the market value of the property at the time of the purchase. The amount is based on a graduated scale explained in the table below:

€0 -      €85,430 3%
€85,431 -   €170,860 5%
€170,860+ 8%

If the property is in joint names (i.e. husband and wife) or two individual names, then the purchase value is divided into two portions resulting in reduced transfer fees, e.g. a €150,000 property bought by two people will be split to two, and each person will pay 3% on their €75,000 share.

Stamp Duty

The purchaser is liable for the payment of stamp duty at the rate of €1.5 per thousand (up to the value of €100,000) and €2 per thousand thereafter. This should be paid within 30 days of signing the contract with the developer.

For example if the purchase price is €250,000

first €100,000    0.15%     150

next €150,000   0.20%     €300

Total stamp duty paid      €450

VAT on buildings

Where the application for a building license was filed after the 1st of May 2004, VAT applies. VAT, currently at 15% is paid on every instalment the buyer makes to the developer. First time buyers who are also permanent residents are entitled to a refund of 2/3 of the VAT they pay.

Immovable Property Tax

The annual immovable property tax is calculated on the market value of the property as assessed on 1st January 1980. The rate of taxation is as follows:

1980 market value of property      Annual property tax

€0 - €170,860                    
Exempt
€170,861 - €427,150 0.25%
€427,151 - €854,300 0.35%
€854,301+ 0.40%


Local Authority Taxes & Rates

Different local authorities may charge different rates but one should expect to pay anything between €85 and €256 per year, depending on the size of your property. This tax is for refuse collection, street lighting, 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

When selling a property in Cyprus, capital gains tax will be payable at the rate of 20% on the gain made. The gains are the difference between the sales proceeds and the original cost of the property. The first €17,086 is 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 property.
When selling a property that was used as the main and permanent residence for at least 5 years before the sale, the first €85,430 (instead of €17,086) of the sale price is exempt.

Double Taxation Treaties

Cyprus has double-taxation treaties with Austria, Belarus, Belgium, Bulgaria, Canada, China, the Czech Republic, Denmark, Egypt, France, Germany, Greece, Hungary, India, Ireland, Italy, Kuwait, Kyrgyzstan, Malta, Mauritius, Norway, Poland, Romania, Russia, Singapore, Slovakia, South Africa, Sweden, Syria, Tajikistan, United Kingdom, United States, Yugoslavia (former).

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. Treaties are under negotiation with another 23 countries.

Duty Free Privileges

Europeans 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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