Cyprus seems to attract the interest of foreigners from around the world. It is a beautiful island with excellent weather and climate. Its position at the crossroad of three continents, namely Europe, Asia and Africa enables residents to travel easily and cheaply to many other countries. Furthermore, the major tax incentives available to entities registered in Cyprus have made the island a particularly attractive business forum. These are briefly the main reasons behind the increased interest on the part of many foreigners to acquire residential or commercial property in Cyprus.
Our office can guide you through each and every step in the process leading to acquiring property in Cyprus.
Make sure that the contracts you use for the purpose of selling your property are drafted so as to protect your own interests but afford equal protection to the interests of the buyer. When a contract of sale achieves a fair balance between the interests of both parties, you can save both time and effort as there will not be a need for significant amendments and the contract will be signed promptly. Furthermore, fair contracts tend to increase trust and confidence in your company.
The first step will be to find a property that suits you. You can search for a Cyprus property on the Internet by using one of the major search engines or by visiting the website of one of the many Cyprus estate agents or property developers. Feel free to contact us so as to receive guidance on all the necessary steps.
Important: If you are going to use an estate agent, make sure that he is an approved and registered estate agent. Such agents are members of the Cyprus Real Estate Agents Association (CREAA). Your lawyer can verify the legitimacy of your chosen estate agent on your behalf.
All major financial institutions in Cyprus offer schemes designed to financially facilitate purchases of property in Cyprus. The exact terms of the offered loans and other facilities depend on several factors including the type and value of the property and often, the nationality of the borrower. Our office has strong relations with some of the major financial institutions in Cyprus and can assist you in obtaining or negotiate on your behalf, financial assistance.
You will be asked to sign a contract of sale with the seller. Most often, such contracts are already drafted standard contracts, which are presented to you for signature. It is of utmost importance that you have your lawyer review the said contract and propose any necessary amendments to it reflecting your particular case before proceeding with signing it. These contracts are often drafted taking into account primarily the interests of the seller.
Apart from that, it is advisable to make a search at the appropriate Land Registry office to verify the seller’s title and right to sell as well as any charges or mortgages to which the property is subject. Your lawyer can conduct this search for you and advise you as to any possible risks associated with the potential purchase.
A tax-fee is payable when transfer is to be effected of freehold ownership of real estate in the name of the purchaser. The person responsible for the payment of the said tax-fee is the purchaser. The amount of the payable tax-fee depends on the value of the property. For example:
|Value of property (EUR)||Amount Payable (EUR)|
Important: If the property is to be transferred in the name of two individuals, the purchase value is divided in two and the amount of the tax-fee is consequently reduced.
The registered owner of the property is liable to pay annually immovable property tax, which is based upon the value of the purchased property as follows:
Value of Property (EUR)
Accumulated Tax (EUR)
|More than 3.000.000,00||19|
There are certain additional fees and expenses associated with ownership and use of immovable property in Cyprus. More specifically, the owner will have to pay an annual municipal tax, which covers, amongst others, refuse collection and street lighting. As always, the owner will have to pay all other expenses associated with the use of the property, such as electricity, water and telephone, which are charged at reasonable rates.
If you ever decide to sell or rent your property in Cyprus, you will of course need a valid contract governing all the important aspects of the transaction. You have to bear in mind that in the case of a sale, you will be liable to pay capital gains tax which is charged on the gains from the property disposal at a rate of 20%. There are however certain exemptions.
Even if you are not a Cypriot, Cyprus Succession Laws do not allow you to leave your property situated in Cyprus to anyone you wish. That property or the biggest part of it must pass to your spouse and/or children (or subsequent relatives if no spouse or children exist) and any Will that provides otherwise will not be considered as valid. There are certain exemptions applicable to British citizens who have a wider freedom to leave their property to any person they wish by drafting a Will.
For the acquisition of new residential properties, a reduced VAT rate, starting from 5%, is applicable.
For the 5% rate to be in effect, certain terms and conditions must be met:
- The property must be used as the primary and permanent residence of the buyer (for ten years).
- The buyer has not acquired any other residence in Cyprus with a reduced VAT rate.
- The applicant must be an individual, over 18 years old, thus legal entities are excluded.
The VAT rate of 5% is applied on the first 200 square meters (building coefficient) of the property as per the architectural plans submitted to the Authorities. On the remaining square meters, the standard rate of 19% is imposed.
On the 2nd of January 2018, in order to fight cases of tax avoidance, a rate of 19% VAT was imposed on the sale of building land for business purposes, a rate which is also applicable on sales of shares of companies that own land and/or immovable property and with the sale of shares the ownership of the land and immovable property is transferred to the new shareholder.
Our office undertakes to locate any property situated in Cyprus registered in the name of your predecessors and proceed with the administration of their estates leading to the transfer any such property in your own name as their heir. For more details, do not hesitate to contact us.