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What is Involved?
Until Cyprus' ascension into the EU in May 2004, a non-Cypriot was limited to purchasing one property in Cyprus. That has now changed and EU citizens are able to buy more than one property or piece of land.
The vast majority of properties are Freehold, which means owning the Title Deeds in perpetuity. The Purchaser and the Vendor are required to sign a contract of sale which is then lodged with Land Registry. On completion, the Land Registry Office transfers and issues Title Deeds.
Method of Payment
- On signing the contract a holding deposit of CY£2000 is required.
- Thereafter, 30% of the total price is required one month later.
- The remaining 70% can be paid as a lump sum, in stage payments or by a mortgage.
V.A.T
Developments that have been granted planning permission after May 2004 are subject to VAT at a rate of 15%.
Disposal of Property
SELLING:
Property in Cyprus maybe freely resold by private resale. The first CY£10,000 profit made on the sale is not taxed and this allowance is per person on the sales contract. On owning a property for 5 years this allowance increases to CY£50,000 per person, however this allowance is given 'once only' and cannot be repeated on the sale of a second property. Capital Gains Tax of 20% will then be charged above this. Please note that there is no Inheritance Tax payable under Cyprus Law..
Taxes and Additional Costs
Property Transfer Cost
The Property Transfer Fee is paid to the Land Registry when the Title Deeds are released to the Purchaser. The amount is based on the cost of the property and is calculated as follows:
| Up to CY£50,000 |
3% |
| CY£50,001 - CY£100,000 |
5% |
| Over CY£100,000 |
8% |
For Example the Transfer Tax due on a property of CY£125,000 is:
| 3% of CY£50,000 |
£1500 |
| 5% of CY£50,000 |
£2500 |
| 8% of CY£25,000 |
£2000 |
|
CY6000 |
If a couple are buying the same property then the property tax is reduced as both allowances are applied to the calculation ie:
|
Cost for Couple |
| 3% of CY£100,000 |
£3000 |
| 5% of CY£25,000 |
£1250 |
|
CY£4250 |
Stamp Duty
This is not to be confused with UK Stamp Duty. Cyprus Stamp Duty is a small levy charged by the Land Registry when Specific Performance is lodged. It is calculated as follows:
| 1.5 cents per CY£1000 |
for purchase costs up to CY£100,000 |
| 2.0 cents per CY£1000 |
for purchase costs above CY£100,000 |
For example, the Stamp Duty for a property priced at CY£100,000 would be CY£ 150.
Buying Property - Annual Costs
Immovable Property Tax
This is an annual tax that is exempt for properties up to the value of CY£100,000. Thereafter the rates are calculated as follows:
| CY£100,000 - CY£250,000 |
0.2% |
| CY£250,001 - CY£500,00 |
0.3% |
| CY£500,001 + |
0.33% |
Local Authority Tax
The Local Authority Tax covers things such as sewage, refuse collection, street lighting etc and depending on the size of the property will vary from CY£50 - CY150 p/a.
Electricity, Water and Telephone Services are easily arranged and are low cost.
Communal Fees
If the property you choose is on a complex or golf resort, you will pay a communal fee which is a share of the running costs of cleaning and maintaining common areas such as the swimming pool, gardens, leisure facilities, stairways and lifts. The fees range from CY£200 - CY£400 depending on the size of the property and the facilities provided.
Legal Advice
The Legal System in Cyprus is based heavily on the British Scheme and therefore benefits the buyer. Once the contract of sale is signed and lodged with the Land Registry, the Purchaser's ownership rights are protected and the property can not be leased, transferred, sold or mortgaged by anyone other than the purchaser.
Shervington's can introduce you to a reputable lawyer who will:
- Study, prepare and check the Contract of Sale
- Become your Power of Attorney
- Lodge the Sales Contract with Land Registry for 'Specific Performance'
- Apply to the Central Bank for the approval of Title Deeds to be transferred
- Transfer the Title Deeds
The fees for this are approximately CY£1000. All recommended lawyers are legally trained in Britain and produce all contracts in English.
Banking and Financial Advice
We can assist you in setting up Sterling and Cypriot accounts which will allow you to transfer money directly from the UK. Applications can be made for a capital and interest loan of up to 80% of the value of the property and we can introduce you to financial experts who can advice on:
- Taxation
- Formation of Off-shore and Cyprus Companies
- UK and Cyprus Mortgages
- Avoiding Inheritance Tax and EU Savings Tax
- Saving Bank Charges and fixing better Exchange Rates on money transfers from the UK, including mortgages, pensions and lump sums
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