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Buyers Guide
WHY BUY PROPERTY IN CYPRUS
Cyprus' unique geographical position between the crossroads of Europe and the Middle East is undoubtedly makes it a major centre for trade and communications.
The imminent accession of Cyprus into the EU (May 2004) and the prospect of solving the longstanding political problem together with the additional attractions of hospitality the natural availability of dream holidays make Cyprus a prime location for property investment. Cyprus has become increasingly popular amongst overseas people mostly as a destination for retirement or for the acquisition of a holiday home. The demand is usually from buyers and investors from the EU countries but mostly from UK citizens. There are well over 30.000 properties currently owned by overseas people mostly in the Pafos, Paralimni and Agia Napa areas but also in the Limassol and Larnaca Districts.
The hospitality of the locals, the ideal weather conditions, the low crime level with crime at a low level are only some of the factors that provoked the high demand.
Because of the high demand and short supply local property values have risen sharply over the last few years. However there are still plenty of good opportunities, and local property prices are still lower than many other European countries. Holiday homes and land are still being offered at considerably lower prices in Cyprus than in any other EU country.
PURCHASE PROPERTY IN CYPRUS
Overseas buyers (of non-Cypriot citizenship) are entitled to ownership of a villa, an apartment or a plot of land. In the case of land there is a restriction on the area which should not be exceeding 4013 m2. Offshore companies and organizations may also acquire premises for their business and for home residence of their employees.
In order to transfer a property ownership on a non-Cypriot's name approval of the District Officer is required.(or the Council of Ministers) Such approval is relatively easy to he granted and the procedure is usually straight forward unless the property is intended for commercial use. In such cases, however, for acquisition of property for commercial purposes, could he granted if the particular proposal would contribute to the of the current Government policy. Although buying properly in Cyprus is a simple procedure. It is advisable for people, not familiar with all the procedures and the local legal system, to consult a lawyer. There are solicitors specialising in the field and they can advise you on any inquiries you may have. The solicitor would do all the background work for you. Prepare the sales contract, do all necessary investigations including a surveyors report and provide you with progress report for the sale process. It is worth to appoint one, however it is always advisable, to agree his fees first. A list of reputable lawyers /solicitors is available on request. Contact us.
SELLING YOUR PROPERTY
Selling your own property may he more difficult than buying, as it will be necessary to compete with the well-organised land developers and agents. So be prepared, it may take up to six months depending on market conditions.
Advertising plays a major part and can be as simple as placing a "For Sale" sign on your property or a paid advertisement in the columns of property newspapers. For best results and for your own peace it is recommended lo appoint a Registered Estate Agent to sell your property. The commission payable is normally 3%-5% on the sale price, although some agents in more commercial
You can agree on this during your first meeting with them. Make sure he does not offer the property for more money (untrustworthy agents may overprice your property to make extra money and consequently they make it unmarketable).
Again Ad-Estate eliminates this possibility. We are linked with the most professional estate agents. Placing the details of your home or property on this site, a number of professional estate agents will take over the sale of your property and the best possible result is guaranteed.
Bear in mind the payable taxation (if any), the exchange rate and the exportation of the sales amount etc., prior to any commitment.
The sales/transfer of property's ownership is a straightforward procedure.
Together with the buyer present, you have to present yourselves at the District Land Registry offices and sign the sale documents.
Transfer Fees: All transfer fees are payable by the buyer.
Property Tax: Remember that prior to the date of the transfer, you should pay all outstanding property taxes and produce the receipt to the Land Registry. The annual property tax is calculated on the market value of the properly as from 1st January 198O.
Market Value £CY Annual Tax Cy£ per thousand
Up to £100,000 free of tax
£100,001 - £250,000 2.5
£250,000 - £500,000 3.0
Over £500,000 4.0
Stamp Duty Fees: Unless otherwise stated in the sale contract, the buyer pays all Stamp Duty Fees at the rate of £1.5 per thousand of the value up to Cy £100,000. Over £100,000 the Fees are £2.0 per thousand. The documents should be stamped within 30 days after their signing in order for the contract to be legally valid.
LOANS AND MORTGAGES
Local banks offer a variety of loans either in CY£ or in foreign currency. The normal interest rates vary, (Currently around 7-10%). In the case of a mortgage, mortgage fees are involved, which are calculated at aprox.1% on the mortgage amount. Income Tax and Capital Gains Tax:
Land dealers are treated under the Income Tax Laws whereas non-dealers under the Capital Gains Tax Laws. Capital Gains Tax is levied at the rate of 20% on gains arising from the disposal of immovable property or the disposal of shares of companies, the assets of which consist mainly of immovable properly.
Note that no Capital Gains Tax is paid when selling shares of companies that are listed on the Cyprus Stock Exchange.
The "gains" is the difference between the sales proceeds and the original cost of the property. In the case of a property, which was purchased before 1/1/1981 (hesc "gains" are the difference between the sales proceeds and the market value of the properly as at 1/01/1981. Inland Revenue fixes ihe assessed value on this date and it is known prior to the acquisition. The cost of acquisition includes any interest payments made lor the acquisition, and also any extensions to the properly are deductible from the gains. Also the inflation rale (as this is published by the Government) is added on the acquisition. Therefore the lax is charged on gains that take into account the inflation. Capital Gains Tax as a whole has minimal effects, since the appreciation of value coupled with the following allowances and inflation leaves little to he taxed, however these allowances are not applicable in the case of a company.
Allowances:
The following allowances are available to individuals:
Note that the above allowances are not available separately. An individual claiming a combination of the above allowances is only allowed a maximum of allowances of Cy£50.000.
Cyprus residents and companies registered in Cyprus are subject to Capital Gains Tax when disposing of property, wherever this is situated, either in Cyprus or abroad.
Non-residents are taxed only when selling properly situated in Cyprus. They can be totally exempl from this Tax if Ihey prove thai they acquired the particular property by importing foreign current between 1/08/1980 and 13/07/1990.
Losses are calculated in the same way as gains and they can be sliced off against capital gains of the same and future years.
Estate Duty:
Estale Duly was abolished as from 01/01/2000.
Value added Tax: As from 1.1 2003 the VAT rate is 15% on specific goods Real Estate is excluded from VAT for the time heing as are most fund items, medicine and other essentials.
Important Note:
Taxation is subject to changes so it is advisable to check again when you are about to purchase or sell your properly.
In 2002 a new law came into effect, regarding the acquisition of property by foreigners, and which has removed the restriction on the acquisition of property in Cyprus by EU citizens for first time buyers as well as for a second house under certain conditions.
However, in order lo comply fully with the Acquis Communautairc (meaning complete liberalisation) in
acquiring property by EU citizens there is a 5 year transition period (after 1/5/2009)- for non-EU citizens the ex isting procedures as well as restrictions remain the same.
Cyprus' unique geographical position between the crossroads of Europe and the Middle East is undoubtedly makes it a major centre for trade and communications.
The imminent accession of Cyprus into the EU (May 2004) and the prospect of solving the longstanding political problem together with the additional attractions of hospitality the natural availability of dream holidays make Cyprus a prime location for property investment. Cyprus has become increasingly popular amongst overseas people mostly as a destination for retirement or for the acquisition of a holiday home. The demand is usually from buyers and investors from the EU countries but mostly from UK citizens. There are well over 30.000 properties currently owned by overseas people mostly in the Pafos, Paralimni and Agia Napa areas but also in the Limassol and Larnaca Districts.
The hospitality of the locals, the ideal weather conditions, the low crime level with crime at a low level are only some of the factors that provoked the high demand.
Because of the high demand and short supply local property values have risen sharply over the last few years. However there are still plenty of good opportunities, and local property prices are still lower than many other European countries. Holiday homes and land are still being offered at considerably lower prices in Cyprus than in any other EU country.
PURCHASE PROPERTY IN CYPRUS
Overseas buyers (of non-Cypriot citizenship) are entitled to ownership of a villa, an apartment or a plot of land. In the case of land there is a restriction on the area which should not be exceeding 4013 m2. Offshore companies and organizations may also acquire premises for their business and for home residence of their employees.
In order to transfer a property ownership on a non-Cypriot's name approval of the District Officer is required.(or the Council of Ministers) Such approval is relatively easy to he granted and the procedure is usually straight forward unless the property is intended for commercial use. In such cases, however, for acquisition of property for commercial purposes, could he granted if the particular proposal would contribute to the of the current Government policy. Although buying properly in Cyprus is a simple procedure. It is advisable for people, not familiar with all the procedures and the local legal system, to consult a lawyer. There are solicitors specialising in the field and they can advise you on any inquiries you may have. The solicitor would do all the background work for you. Prepare the sales contract, do all necessary investigations including a surveyors report and provide you with progress report for the sale process. It is worth to appoint one, however it is always advisable, to agree his fees first. A list of reputable lawyers /solicitors is available on request. Contact us.
SELLING YOUR PROPERTY
Selling your own property may he more difficult than buying, as it will be necessary to compete with the well-organised land developers and agents. So be prepared, it may take up to six months depending on market conditions.
Advertising plays a major part and can be as simple as placing a "For Sale" sign on your property or a paid advertisement in the columns of property newspapers. For best results and for your own peace it is recommended lo appoint a Registered Estate Agent to sell your property. The commission payable is normally 3%-5% on the sale price, although some agents in more commercial
You can agree on this during your first meeting with them. Make sure he does not offer the property for more money (untrustworthy agents may overprice your property to make extra money and consequently they make it unmarketable).
Again Ad-Estate eliminates this possibility. We are linked with the most professional estate agents. Placing the details of your home or property on this site, a number of professional estate agents will take over the sale of your property and the best possible result is guaranteed.
Bear in mind the payable taxation (if any), the exchange rate and the exportation of the sales amount etc., prior to any commitment.
The sales/transfer of property's ownership is a straightforward procedure.
Together with the buyer present, you have to present yourselves at the District Land Registry offices and sign the sale documents.
Transfer Fees: All transfer fees are payable by the buyer.
Property Tax: Remember that prior to the date of the transfer, you should pay all outstanding property taxes and produce the receipt to the Land Registry. The annual property tax is calculated on the market value of the properly as from 1st January 198O.
Market Value £CY Annual Tax Cy£ per thousand
Up to £100,000 free of tax
£100,001 - £250,000 2.5
£250,000 - £500,000 3.0
Over £500,000 4.0
Stamp Duty Fees: Unless otherwise stated in the sale contract, the buyer pays all Stamp Duty Fees at the rate of £1.5 per thousand of the value up to Cy £100,000. Over £100,000 the Fees are £2.0 per thousand. The documents should be stamped within 30 days after their signing in order for the contract to be legally valid.
LOANS AND MORTGAGES
Local banks offer a variety of loans either in CY£ or in foreign currency. The normal interest rates vary, (Currently around 7-10%). In the case of a mortgage, mortgage fees are involved, which are calculated at aprox.1% on the mortgage amount. Income Tax and Capital Gains Tax:
Land dealers are treated under the Income Tax Laws whereas non-dealers under the Capital Gains Tax Laws. Capital Gains Tax is levied at the rate of 20% on gains arising from the disposal of immovable property or the disposal of shares of companies, the assets of which consist mainly of immovable properly.
Note that no Capital Gains Tax is paid when selling shares of companies that are listed on the Cyprus Stock Exchange.
The "gains" is the difference between the sales proceeds and the original cost of the property. In the case of a property, which was purchased before 1/1/1981 (hesc "gains" are the difference between the sales proceeds and the market value of the properly as at 1/01/1981. Inland Revenue fixes ihe assessed value on this date and it is known prior to the acquisition. The cost of acquisition includes any interest payments made lor the acquisition, and also any extensions to the properly are deductible from the gains. Also the inflation rale (as this is published by the Government) is added on the acquisition. Therefore the lax is charged on gains that take into account the inflation. Capital Gains Tax as a whole has minimal effects, since the appreciation of value coupled with the following allowances and inflation leaves little to he taxed, however these allowances are not applicable in the case of a company.
Allowances:
The following allowances are available to individuals:
- The first Cy£10.000 of gains arising from ihe disposal of any property.
- The first Cy£15.000 of gains arising from the disposal of agricultural land by a farmer (subject to certain conditions).
- The first Cy£50.000 of gains arising from ihe disposal of a house used by the owner for own habitation (subject to certain conditions).
Note that the above allowances are not available separately. An individual claiming a combination of the above allowances is only allowed a maximum of allowances of Cy£50.000.
Cyprus residents and companies registered in Cyprus are subject to Capital Gains Tax when disposing of property, wherever this is situated, either in Cyprus or abroad.
Non-residents are taxed only when selling properly situated in Cyprus. They can be totally exempl from this Tax if Ihey prove thai they acquired the particular property by importing foreign current between 1/08/1980 and 13/07/1990.
Losses are calculated in the same way as gains and they can be sliced off against capital gains of the same and future years.
Estate Duty:
Estale Duly was abolished as from 01/01/2000.
Value added Tax: As from 1.1 2003 the VAT rate is 15% on specific goods Real Estate is excluded from VAT for the time heing as are most fund items, medicine and other essentials.
Important Note:
Taxation is subject to changes so it is advisable to check again when you are about to purchase or sell your properly.
In 2002 a new law came into effect, regarding the acquisition of property by foreigners, and which has removed the restriction on the acquisition of property in Cyprus by EU citizens for first time buyers as well as for a second house under certain conditions.
However, in order lo comply fully with the Acquis Communautairc (meaning complete liberalisation) in
acquiring property by EU citizens there is a 5 year transition period (after 1/5/2009)- for non-EU citizens the ex isting procedures as well as restrictions remain the same.
Properties for Sale in Cyprus
