PROCEDURE FOR BUYING PROPERTY IN CYPRUS BY Ilisters
Purchasing real estate in Cyprus is a simple process that can be broken down into six steps.
- Ilisters Property Consultation
Our knowledgeable Sales Associates are only a phone call away, ready to answer any questions you may have and schedule a meeting with you at any of Ilisters’ locations throughout Cyprus. The Sales Associate will go through your needs with you, show you floor plans and photographs of potential homes, and set up a viewing appointment.
- Visiting a House
The Ilisters Sales Associate will schedule a time for you to visit the homes of your choosing, pointing you all elements of the property as well as the lifestyle in the region. After hearing the benefits and drawbacks given by our property experts, it is obviously the client’s decision to make.
- Making a reservation for a property in Cyprus
Ilisters prepares a ‘Offer to Purchase’ agreement containing the price you are proposing for the property and the payment arrangements once you have settled on your ideal home. You pay a reservation fee to remove the property off the market and secure it at its current price once the Seller accepts and signs the contract. To begin preparing the Sale / Purchase Agreement, the Seller must provide you with a ‘Search Certificate’ from the Land Registry, indicating any liens and encumbrances on the property. A ‘Reservation Agreement’ is completed before the Sale / Purchase Agreement in instances when you need to apply for a loan, so that the Seller will wait for your loan approval. Following that, all information is gathered in order to prepare the Sale/Purchase Agreement.
- Purchase Agreement
A draft copy of the contract of sale, as well as the property’s drawings and particular specifications, will be made up and sent to you for review and comments. At this point, you have the option of seeking legal counsel from an independent property solicitor. Once you’re satisfied with the contract’s content, three full sets will be created and a signing meeting with the property owners will be scheduled.
The following items will be included in the contract:
- Contract of the Heart
- Drawings of the property’s architecture
- technical requirements (if off plan)
- Permits for Planning and Construction (if off plan)
- Land, apartment, or villa title deed
You have 30 days from the day you sign the contract of sale to pay the stamp duty and 60 days to deposit it at the Land Registry Office. Please read the Useful Information section below for stamp duty costs.
- Taking possession of your home
We will negotiate with you and the property owner on the time and date of delivery once contracts have been signed and the property has been paid in full. When that moment comes, you’ll:
- Examine the property
- Any problems will be recorded and documented.
- You will be provided information to enable you to move utilities into your name and get property insurance.
Foreign investors must either go to Cyprus to take ownership of their property or designate a legal agent to do so on their behalf. To take delivery of your property, you will need to travel to Cyprus for at least 2-3 days.
- Transferring the Deed of Title
Ilisters will organize all of the documentation needed for the Land Registry transfer after the Sale/ Purchase Agreement is finalized. The seller must acquire permissions from the Municipality, Water Board, Sewerage Board, and Tax Department in order to schedule an appointment for the transfer. If the property has a mortgage, the seller will give his bank at least one week’s notice to prepare all of the documentation necessary to remove it at the time of the transfer. When the bank receives payment of the mortgage amount together with the transfer, the bank will cancel the mortgage. As the buyer, you must issue Bankers’ Drafts, which must be presented to the Land Registry at the time of the transfer. You must also pay the transfer costs to have the title deed transferred into your name.
TAXES AND FEES ON PROPERTY
- Stamp Duty (A)
When the purchase agreement is stamped, stamp duty is paid to the Director of Inland Revenue. The following are the stamp duty charges:
Nil for the first € 5,000
From € 5,000 to €170,000, there is a 0.15 percent increase in value.
€170,000 with a 0.20 percent margin
|Purchase Price: €400.000|
|TOTAL Stamp Duty payable||€705|
- Transfer Fees (B)
The district Land Registry Office will impose transfer fees when the property is transferred and registered in the purchaser’s name. These costs are determined depending on the market value of the property at the time of purchase and are calculated as follows:
- 3 percent of the value up to €85,000
- 5 percent of €85,001 – €170,000
- 8% of over €170,001
Transfer costs are levied in installments and are due when title deeds are issued (typically 3–5 years following final transfer of the property). Property with dual ownership has advantages since the value of the property may be shared between the owners and transfer costs will be levied on 50% of the property value for each.
- Taxable Value Added Tax (VAT) on Real Estate (C)
Since Cyprus’s admission to the European Union, VAT has been levied on property transactions; however, VAT is not charged in situations where a municipal permission application was lodged before May 1, 2004.
The sales price will be subject to VAT if the town planning application is lodged after the 1st of May 2004.
The value added tax (VAT) is charged at a rate of 19%. For first-time buyers who want to make the home their permanent residence, 14 percent of the VAT paid might be reclaimed. A permanent resident of Cyprus is someone who stays in the country for at least 183 days.
- Communal Expenses (D)
When it comes to managed properties, a service charge is levied to cover the cost of keeping the common sections of the building in excellent working order. The service price is generally calculated per square meter and might range from €50 to €150 every two months.
- Capital Gains Tax is a tax on the profit made from the sale of a property.
If the buyer decides to sell the home later, Cyprus law enables the whole sum paid in foreign currency to be transferred overseas at the time of selling. The whole purchase price, as well as any rise in the property’s value, can be transferred right away. One of our Sales Consultants will advise you on any tax exemptions available and calculate any Capital Gains Taxes due to the purchase or sale of a home.
- Tax on Immovable Property:
An yearly immovable property tax is imposed on the registered owner of a property acquired in Cyprus, based on the property’s market value on January 1, 1980.
|Property Value at 01.01.1980||Property Tax Rates|
|Up to €170,860||Nil|
|€170,860 – €427,150||0.25%|
|€427,150 – €854,300||0.35%|
|Over € 854,300||0.4%|
- Additional Property Taxes:
Property taxes are assessed by the municipality and are based on the size and value of the property. This comprises garbage collection, sewage, street lighting, and other services, and it ranges from €50 to €250 per year per unit property, depending on the region.
- Inheritance Tax
In Cyprus, there is no inheritance tax.
- Tax Advantages
Cyprus’ corporation tax rate is presently 12.5%. There are a variety of tax benefits available, which are particularly appealing to individuals wanting to invest in Cyprus or retire to Cyprus. It’s usually a good idea to talk to your auditors and legal advisors about these issues.