To complete legalities and go through formalities are the most confusing part for many property buyers. Outlining, however, the steps you need to go through to purchase your dream house within Cyprus, we make the process as simple as possible.
After making an offer to purchase a property and when the offer is accepted by the seller, you need to appoint a lawyer who can represent you in Cyprus and assist you with the technical, legal, and financial matters associated with purchasing property in Cyprus.
There are two main categories of properties in Cyprus. The first one includes the properties that their individual title deeds are available when you purchase them. The second one includes the properties that their individual title deeds are not available at the time of purchase. The availability of individual title deeds is dependent on the project completion and also on subdividing by the Lands Office. Given that the purchasers are only required to obtain a permit from the District Office, they can easily transfer the properties with title deeds in their name. Note that obtaining the permit from the District Office is only a matter of formality and is not required if a land is purchased or the purchaser is European.
Purchasing property in Cyprus and legal formalities
1. Purchasing the property in Cyprus that is completed at the time of purchase:
The buyers pay the stamp duty and registration costs at this stage. Note that stamp duty is calculated as below:
€2.56 per €1.708.60 for the first €170.860.00 and €3.417 per €1.708.60 for any amount above €170.860.00
You also need to allow for lawyer’s fee that is usually about 1% of the purchase price.
You are also responsible for transfer fees paid to transfer the deed into your name. The calculation of the transfer fees are based on the purchase price and also on the number of names the property will be registered in. The fees are paid when the deeds have been transferred into your name.
2. Taking possession of the property in Cyprus:
At this time, the purchaser must pay for all the utilities which will be connected. It is at this stage that the purchaser can establish all the rights in Cyprus such as tax/driving duty free/residence and domicile.
3. Transferring the deeds of the property in Cyprus:
This stage is completed when: firstly, the Council of Ministers secures a permit for the purchaser to transfer the deeds in their names – if the property is a plot of land or a field, this permit is not required; secondly, the Subdivision of the project is completed by the vendors through the Lands Office. In case the title deed of the property is available and the permit is granted, the transfer is immediately allowed. Then the purchaser is to pay the transfer taxes.
Transferring the title deed into your name
If the property is supposed to be in two names, the formula to calculate the fees is as below:
For the first €170,000- 3%
For the second €170,000- 5%
For example, if the property is valued at €200,000, the fee will be €6,600.
NB: Employing a solicitor to legally secure the sale in Cyprus is highly recommended.
- Sign a valid contract of sale that is free of financial and legal impediments.
- The Lands Office will sign, stamp and register a valid contract. This prevents the vendors from mortgaging or reselling the property.
- When the transfer takes place, the purchaser will be entitled to secure possession of the property prior, and regardless.
- From the moment the contract is signed, the purchaser’s interest is protected by the inheritance laws.
We hope the information provided above can make purchasing a property in Cyprus less boring and confusing.
Whether you have already moved to Cyprus or intend to move to this beautiful island, you may wish to know how the property-related matters are dealt with in this country. The answers provided to the questions asked frequently by many can help you develop a better idea about this business in Cyprus.
Now that you have chosen to relocate, visit, or invest in Cyprus, you may wish to know more about this country. What follows are the questions that are frequently asked by people who have already moved or intend to move to Cyprus. The answers provided can help you develop a better understanding of the property-related issues in Cyprus. Should you have further questions on property in Cyprus, please do not hesitate to contact us (info@iListers.com). We will be more than happy to be of assistance to you.
Who can purchase property in Cyprus?
As long as they have an EU passport, all EU citizens can study, live, and work in Cyprus with no restrictions. They can also own homes or invest in Cyprus properties but those who are non-EU residents:
- Cannot buy a land exceeding 4014 square meters.
- Cannot own any shares within a company that deals with property in Cyprus.
- Cannot purchase more than one house or apartment.
- Must not have a criminal record.
What are the fees associated with purchasing property in Cyprus?
The fees include a small stamp duty charge that is calculated based on the purchase price. In case the property you are purchasing has title deeds, you will also need to pay the transfer fees in order to have the deeds transferred in your name. The fees are calculated based on the number of names the property is to be registered in and also on the purchase price. Besides, you will be responsible for connection fees for the utilities such as water, electricity, and telephone once you have taken the possession of the property. Finally, you need to allow for lawyer’s fees that usually around 1% of the purchase price. As a buyer, you do no need to pay the agent fees.
NB: Stamp duty is calculated as below:
€2.56 per €1.708.60 for the first €170.860.00 and €3.417 per €1.708.60 for any amount more than €170.860.00
What is a cancellation agreement and is there any cancellation fee?
Cancellation agreement is drawn up if a property does not have title deeds and it cancels the contact between the seller and the developer who still holds the deeds. In that case, a new contract is concluded between the new buyer and the developer. A fee is to be paid for the cancellation of the existing contract between the developer and the original buyer of the property. This is the cost for selling without deeds and is to be paid by the seller. Although it is generally 3% of the original price of the purchase, it depends on the developer’s decision. When you are purchasing a property in Cyprus with no title deeds, you may have the opportunity to cap the possible cancellation fee at about €500 and have it indicated in your contract.
How are property transfer fees calculated?
The transfer fees are calculated based on the market value of the property in Cyprus and the purchase price is usually considered to be the market value. If the property is in one name, the first €85,430 is charged at 3% and each person gets this allowance if the property is in two names. The next €85,430 will be charged at 5% and any amount more than €170,860 will be charged at 8%. For example, the transfer fee for a house valued €200,000 is calculated as follows:
- 85,430 at 3% = 2562.90
- 85,430 at 5% = 4271.50
- 29,140 at 8% = 2331.20
- Total tax fee = 6833.40
If I decide my property in Cyprus, how much is the capital gain tax?
You need to pay 20% on the difference between the price you originally purchased the property in Cyprus and the sales price in addition to the possible inflation during the period. There is also a €17,086 fee per owner and a €34,172 fee if a couple deducted from the resale price. If you are a Cyprus permanent resident and have lived in the home for 5 years, the allowance will then be €85,430.
Are there any tax advantages to living in Cyprus?
Cyprus has become a tax haven since it joined the European Union. Upon becoming a Cyprus tax resident, UK citizens can receive a large percentage off their income tax bill. You just need to declare your international income in Cyprus and then the UK government will not require you to pay more. Cyprus is in a tax treaty partnership with 43 countries.
In case you have resided in Cyprus for at least 183 days in a year, you are then liable to pay Cyprus Income Tax on your worldwide income. In order to avoid being taxed on this by the UK government, you need to download DT/Individual Form. After completing the form, you need to purchase a Revenue Stamp from the main Post Office in Cyprus. Then you need to take the form to the Cyprus Inland Revenue Office to be stamped again. Lastly, you need to return it to the UK tax authorities so that they can make the necessary arrangements for your pensions to be paid without deducting UK tax. Although this may take a few months to process, you will receive a rebate from the UK government. In case you receive a company and state pension, you can get UK tax relief on both of them.
Depending on your situation, some potential maximum tax rates calculated for different income levels are as follows:
Corporate tax: 10%
Personal Income Tax: 30%
Value Added Tax: 15%
Can I obtain a home loan/mortgage in Cyprus?
The new rules based on the information provided by Piraeus Bank in Paphos are as below:
A person who intends to obtain a mortgage needs:
- To provide a concrete proof for his/her ability sustainable ability to repay the loan
- To complete and sign Personal Financial Statement (PFS) and attach it to the application (the debt to income ratio must be less than 30%)
- To submit a copy of passport
- To provide Bank Credit reference
- To submit bank statements of all accounts that have been provided for the last 12 months (particularly the statements of the account in which salary and other incomes are deposited)
- To provide tax declaration forms completed over the last three years
- To offer proof of permanent address (i.e. utility bill)
- To declare the recent 3 months of payment or contract of employment
- Provide building permit
- Valuation report (which is executed by the bank)
- To provide the title deed for mortgage
NB: The customer’s contribution should be 50% of the purchase price.
Upon the approval of the loan, the following conditions must be met:
- First mortgage for the loan amount
- Fire and earthquake insurance
- Personal guarantee if the loan is not joint
- Life insurance in the applicant’s name for the loan amount
What is AX Number?
It is a unique reference number that is issued by the Land Registry as soon as an application is made to receive the Title Deed. It will be issued when the developer submits an application for the issuance of Title Deeds for your property and other properties that are covered by his planning application. Your developer should be able to let you know the AX reference number of the application if he has applied for the issuance of the Title Deeds. It is important to know the number when selling the property and your solicitor or developer will brief you or research the matter.
Note that there have been approved changes to the Immovable Property Tax as of September 27, 2013. Accordingly, the minimum payment of €75 is no more required and low value properties are exempt from the charge (e.g. properties that are valued at less than EUR 12,500).
What are the Immovable Property Tax Rates?
The rates that have been revised starting in October 2013 and onward are as below:
|Assessed 1980 Property Value||Tax Rate||Tax||Cumulative Tax|
|€1 to €12,500||Nil||€0||€0|
|€12,501 to €40,000||0.6%||€240†||€240†|
|€40,001 to €120,000||0.8%||€640||€880|
|€120,001 to €170,000||0.9%||€450||€1,330|
|€170,001 to €300,000||1.1%||€1,430||€2,760|
|€300,001 to €500,000||1.3%||€2,600||€5,360|
|€500,001 to €800,000||1.5%||€4,500||€9,860|
|€800,001 to €3,000,000||1.7%||€37,400||€47,260|
|More than €3,000,000||1.9%|
The Inland Revenue Office will calculate the tax amount you need to pay and it is based on the names on the ‘Certificate of Registration of Immovable Property’ and the 1980 value of the home. Properties that are valued at less than €12,500 are exempt from tax.
If a property is valued at €60,000 and is in one name, you need to pay 0.6% on the first €40,000 = €240. On the remaining €20,000, it will be 0.8% = €160, the total will be €400.
If the same property is in two names, it will then be calculated based on the half of the 1980 value for each registered owner. This makes the payment €180 for each person with a total of €360.
How does the educational system in Cyprus work and how can I obtain information on the Cypriot universities?
The educational system in Cyprus is highly developed and includes both private and state schools. Education in Cyprus receives almost 7% the GDP and the island is one the top three countries within the EU that spend the most on education. In terms of quality of education, public schools are generally equivalent to private schools. As many locals in Cyprus already know that their children will be competing to get into university, they send them to private English speaking schools. To be ahead of the intensive courses, most children in state and private schools take extra private lessons.
Cyprus has the highest percentage of citizens in the EU who have received higher education and almost 80% its students are studying at overseas universities.
For a complete list of schools you can visit our website or Cyprus Ministry of Education and Culture website. The language of this website is in English but the content can be translated into English.
To obtain information or seek advice on the import and export of animals and domestic pets, you can contact Paphiakos and CCP Animal Welfare (Tel: 26 946 461 Fax: 26 222 236) or visit the Ministry of Foreign Affairs of the Republic of Cyprus website.
What is the transportation like in Cyprus?
Public transportation in Cyprus includes bus, taxi, and ‘shared taxi’ locally known as service taxi that is much less expensive than the services private taxis offer. The private car ownership in Cyprus is the 5th highest per capita in the world and traffic drives on the left. There are two international airports in Cyprus, one in Paphos and a larger one in Larnaca. The main harbours in Cyprus are located in Limassol and Larnaca that offer services to cruise, passenger, and cargo ships.
Where can I obtain information on cost of living in Cyprus?
One of the best sources available is the Statistical Service of the Republic of Cyprus website. You can obtain the latest information on economic factors, inflation rate, labour, tourism statistics, and much more on this website.