group
Buying a Home in Cyprus
Property Ownership
In comparison to many other countries the process of purchasing property in Cyprus by foreigners is relatively simple. Non-Cypriot buyers are entitled to a FREEHOLD ownership of a villa, an apartment, or a piece of land. In additions EU citizens will not require a work permit.
Mortgage Finance
All commercial banks in Cyprus are authorised to offer mortgage facilities to assist in the purchase of property. The loan will be in foreign currency. The amount ranges from 60% - 80% of the value of the property with a repayment period ranging from 10 to 20 years. Easy terms of payments and long term in house finance schemes are also available.
Acquiring the Title Deed
Transfer of ownership from Vendor to Purchaser is undertaken by a simple procedure through the Cyprus Land Registry Office, either by the buyer in person or by appointing a third party with Power of Attorney.
In the case of a non-Cypriot purchaser, evidence of payment for the property with foreign exchange must be provided as a prerequisite for registration.
The contract of sale must be in writing, and it is advisable that such contracts be registered at the District Land Registry office within the sixty days from the contract date. This protects the buyer’s rights to the property and provides additional safeguards.
When issued, the title deed will be registered in the name of the buyer, and will be recorded in the government archives. The government archives are confidential and will not be published or made accessible under any circumstances.
At any time after the purchase, the buyer may sell or dispose of the property at will, provided he/she has a valid contract.
Legal System
The legal system in Cyprus is based on the British legal system. The land Registry in Cyprus is viewed as probably the most advanced and reliable system in the world, and is also based on the British equivalent.
Purchasing property is Cyprus, therefore is far more secure, with regard to title deeds, than it might be in other Mediterranean countries. All contracts and other paper work are in English.
The Banking System
The banking system in Cyprus closely follows the British pattern. The banks have many convenient branches which are efficient, modern and well equipped with the latest technology.
Non-Cypriot citizens may open foreign currency and local deposit accounts without difficulty. Many international banks have branches throughout the island.
Major credit cards, such as those within the Visa & MasterCard networks, are widely used in Cyprus. Transactions and payments are simply made through your foreign deposit account.
Currency
The Cyprus currency system is based on the decimal system. One Cyprus pound is divided into 100 cents. Coins range from 50 cents, and four bank notes are in circulation: £1, £5, £10 and £20.
Residential Permit
Residential permit is easily obtained for persons living in Cyprus who have purchased property. The applicant needs to submit an application and provide proof that he and his family are self-supporting, the applicant must establish evidence of a secured annual income of not less than CYP 5,000 (five thousand Cyprus pounds) per person. The following documents must accompany the application:
A copy of the sale/rental agreement
Copies of pension/retirement income a temporary permit is granted with the existence of a bank account in Cyprus and a sales agreement of the property purchased. Temporary status can be from one to four years
Any other document relevant to income
Three photos and passport
The application for permanent residence may be submitted to the local immigration office in the area of residence.
Employment
Under the Aliens and Immigration Law, non- Cypriots wishing to take up employment in Cyprus are required to have a work permit. When Cyprus joins the EU the restrictions will be lifted in accordance with EU stipulations and EU citizens will not require a permit.
Property Taxes, Fees & Rates
The transfer of title can be effected once the Council of Ministers’ permission is obtained and the Central Bank of Cyprus confirms receipt of the foreign funds.
Upon transfer of the property and registration in the purchaser’s name, the district Land Registry Office will charge transfer fees, which are based on the market value of the property at the time of the purchase, and are calculated as follows:
Value up to CYP 50,000 3%
CYP 50,001 CYP 100,000 5%
CYP 100,001 and over 8%
For example if the purchase price is CYP 70,000
1st CYP 50,000 3% = CYP 1,500
next CYP 20,000 5% = CYP 1,000
CYP 2,500
Should the purchase be made in joint names (provided the price is more than CYP 50,000) the effective value for calculation is halved.
For example if the purchase price is CYP 70,000
1st CYP 35,000 3% = CYP 1,050
next CYP 35,000 3% = CYP 1,050 CYP 2,100
Stamp Duty
Stamp Duty is paid at the time of signing the contract. Stamp duty is levied at the rate of CY£1.50 per CY£1,000 up to CY£100,000, and thereafter at the rate of CY£2 per CY£1,000.
Estate Duty
Estate duty tax has been abolished as from January 2000.
Local Authority Taxes & Rates
A rough guide could be approximately CYP50 -150 per year depending on the size of your property. This tax is for refuge collection, street lighting, sewerage, etc. The basic utilities, electricity, water and telephone are payable individually in accordance with the consumption and based on a meter reading.
Immovable property tax/services tax
The annual immoveable property ownership tax is calculated on the market value of the property as at 1st January 1980.
Value of property CY Pounds Annual Property Tax rate per thousand (%)
Up to 100,000 exempt
100,001 – 250,000 2%
250,001 – 500,000 3%
Over 500,000 3.5%
Capital Gains Tax
Should the purchaser decide to sell the property at a later date, Cyprus Law provides that the full amount paid for it in foreign exchange may be transferred abroad at the time of resale. The equivalent of the full purchase price and any increase in the value of the property may be transferred immediately. Property sales in Cyprus are subject to capital gains tax at the rate of 20% on the gain, however the first CYP 10,000 are tax exempt.Inheritance Tax
Inheritance tax is not imposed.
Tax Privileges
Cyprus is unique when it comes to the taxation aspects of living on the island. Retirees drawing a pension are exempt from all withholding taxes at source and may be taxed at the nominal rate of 5% maximum or less depending on income after a generous allowance (presently CYP 6,000 per person). Additionally, Cyprus has double taxation treaties with many European countries, safe-guarding its residents from paying tax in both countries. This gives the option to the citizens of those countries to take advantage of the very low rate in Cyprus.
Climate
Cyprus enjoys one of the healthiest climates anywhere on the globe. It registers as the sunniest island in the Mediterranean with 340 days of sunshine per year and boasts the warmest sea temperatures. The swimming season practically starts from April and does not end until November. Pine forests are close to the coast and it is possible to ski in the mountains and swim in the blue Mediterranean all in the same day.
Communications
The island is served by approximately 40 major airlines, linking it with the four corners of the world through its International airports through Lanarca and Paphos, as well as ports in Limassol and Larnarca.
Driving is on the left in Cyprus and distances between cities are becoming even shorter due to a motorway network, which is constantly being extended and upgraded. Cyprus telecommunications are amongst the best in the world with a network which enables participants to have direct dial access to over 200 countries. An important factor in establishing the island as an offshore business centre. In the year 2000, over 1200 international business companies were operating from Cyprus. Telephone and Postal communication is efficient and reasonably priced.
Standard and Cost of Living
Cyprus provides a fairly high standard of living with recent statistics showing the Island as one of the most inexpensive countries in Europe. The local markets flaunt a wealth of colourful fresh fruit and vegetables, meat and fish. Modern supermarkets are fully stocked with a large selection of local and imported goods.
The relatively low cost of living in Cyprus is an advantage which will appeal to the potential buyer.
Language
Greek is the population’s mother tongue. Cyprus was a British colony resulting in over 80% of the population speaking English, and all street signs, directions and shop signs are also written in English. Knowledge of German, French and other European languages is increasing with the Island’s tourist trade.
Peace of mind
Cyprus enjoys a remarkably low crime rate – 1/6 th of the European average, which is another good reason for its popularity with foreign buyers for whom security has become a key element in the property world. Visitors are invariably surprised by this relaxed aspect of life on the island, where crime is virtually unheard of, and theft is not commonplace.
