Property in Cyprus is registered on a land registry, similar to that of the United Kingdom. The first step is the signing of a preliminary contract. This is binding to both the purchaser and the vendor on executing their agreement as it was originally agreed. At this stage a holding deposit is lodged with a Lawyer or a Notary. The purchasing lawyer will carry out all the inquiries that are needed at the District Land Registry to ensure that the vendor of the property is indeed the owner and ensures that the purchaser obtains good title to the property.
Non-Cypriot citizens require permission from the Council of Ministers to purchase property in Cyprus. This normally takes about 8 to 14 months and without this permission Title Deeds cannot be transferred to the purchaser. Although time consuming, this is a quite easy and hassle free process and with the accession in the EU this is not expected to take place for EU citizens.
The final contract is entered only if all the inquiries are proven to be satisfactory. The contract is then lodged with the Land Registry within two months if signed, to prevent the same property being sold for a second time. Application is made at the Central Bank at this time for the necessary permit for the transfer of purchase funds. This application is not necessary if both the purchaser and the vendor are foreigners. The transfer of the title deed is then completed, the full price is then paid and vacant possession is given by the vendor. If the property purchased is new, then the title deed will take up to three years to be issued by the authority in charge. The purchaser is however secured by having the contract of sale with the vendor and that contract is registered in the Land Registry. All the above procedures are usually handled by a solicitor for a very small fee.
1) Reservation Deposit Agreement
The first step is the signing of the Reservation Deposit Agreement. This takes the property off the market for a specified period of usually one month.
Within this reservation period, the appointed lawyer will carry out required investigations at the District Land Registry to ensure that the vendor of the property is indeed the owner and ensures that the purchaser obtains good title to the property.
In Cyprus the reservation amount is usually at 1% of the property price. The reservation deposit will be “subject to contract” i.e. it is non-refundable, but it is returnable, for instance, if the searches are not successful.
Searches before Exchange of Contracts
* Planning Department Search - This ensures a building permit exists and that the developer can legally build and sell to other entities.
* A company search - A detailed company search demonstrates that the developer has the legal capacity to enter into contracts of sale, and that it is not been served a liquidation order.
2) Signing of the Contract of Sale
Once all searches have been successful the next step is the signing of the Contract of Sale by both the vendor and the buyer. This is similar to the English Term, "exchange of Contracts". Upon signing the contract of sale, the purchaser has a 6 weeks grace period to pay the first installment to the vendor. If the purchaser fails to do that, then the contact can turn void.
3) Possession of the property
Possession of the property will only be completed when the property is actually delivered to the purchaser. At this stage the purchaser pays for all the utilities to be connected and he establishes all rights in this country such as: residence, tax, driving, duty free and domicile.
4) Transfer of title deeds
If the property title already exists, then both parties immediately proceed to the transfer of title deeds procedure for the new owners, and pay the remaining amount owed. If the property purchased is new, then the title will take up to three years to be issued by the official authority. In this case the remaining amount owed is repaid to the vendor with the delivery of the property. During that time, legal security to the purchaser is provided when a valid contract is signed, stamped and registered with the land registry.
Important Information:
* Non Cypriot citizens require permission from the council of ministers to purchase property in Cyprus. This normally takes about 8 to 14 months. In the meantime the purchaser can buy the property and live in it while waiting for the application to get approved.
* The below two certificates should be acquired by the applicant in his country and sent as soon as possible. These two certificates will be attached to the application form:
a) A certificate from any person in authority in the country of the applicant certifying his good character or clean criminal record.
b) A certificate from any financial institution as to the applicant's good financial standing. Certificates referring to minimum deposits of 35.000 Cyp to 40.000 Cyp are preferable.
* Upon the repayment by the purchaser, a permit from the Central bank of Cyprus is required for the transfer of the purchase money. This permit is not necessary if both the purchaser and the vendor are foreigners.
* All payments should be effected through official channels (Banks) and money brought in cash should be declared at the airport or sea port on arrival.
*All properties in Cyprus are sold freehold.
* The Cyprus legal system is largely based on Britain's and provides many safeguards to protect the rights of the purchaser.
5) Property Taxes, Fees and Rates
Real Estate Transfer tax-fees are paid once to the land registry and are necessary in order to transfer freehold ownership to the name of the purchaser. The Transferee is responsible for the tax payment. The rates are on a graduated scale.
This can be done as soon as the relevant Government Authority has issued the title deed and the purchase has been completed.
| Value Of Property In CY Pounds (CYP) | Transfer Fee Rate (Per 100%) |
|
|
|
| Up to 50,000 | 3 |
| From 50,000-100,000 | 5 |
| From over 100,000 | 8 |
Should the purchase be made in joint names (provided the price is more than CYP 50,000) the effective value for calculation is halved.
Transfer of ownership takes place by a simple process of registration at the Land Registry Office and the issuing of a title deed after completion and delivery. This can be done either by the buyer personally or by assigning Power of Attorney to a Solicitor. A pre-requisite for registration, in the case of foreigners, is evidence that the property has been paid for with foreign exchange and approval by the "Council of Ministers of Purchaser's application" to buy property in Cyprus. These formalities can be taken up by the buyer's lawyer on the buyer's behalf. However, before the registration of the completed property the purchaser should pay the transfer fees to the Land Registry office.
Stamp Duty
A one-off stamp duty is levied on the purchase of property in Cyprus. The rates are dependent on the contractual purchase amounts and payment is due within 30 days of signing the Sale Agreement. The amount is payable by the purchaser to the tax authorities.
| Purchase Price in CY£ | Stamp Duty in % |
| Up to 100,000 | 0.15 |
| Over 100,000 | 0.20 |
Immovable property tax
The annual immovable property ownership tax is based upon the value of the property. Certain immovable properties are exempt:
| Value of property CY Pounds (CYP) | Annual Property tax (rate per thousand ‰) |
|
|
|
| Up to 100,000 | exempt |
| 100 ,001 250,000 | 2.0 |
| 250,000 500,000 | 3.0 |
| Over 500,000 | 3.5 |
Important Note:
Immovable property tax is based upon the value of the property in 1980 which is much lower than the current market value. So there is no immovable property tax for the majority of properties in Cyprus.
Local authority taxes and rates
A rough guide could be approximately CYP 50 -150 per year depending on the size of your property. This tax is for rubbish 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.
Business Environment
Cyprus provides the ideal investment opportunity and the perfect place to reside. The island's geographical location, high quality of life, British based legal system and persuasive tax incentives are but a few examples of why Cyprus is the choice destination for people purchasing property abroad. Some of the tax incentives and exemptions offered by the Government of Cyprus are:
· Foreign residents may apply for Cypriot tax residency if staying in Cyprus for more than 183 days p.a.
· For residents, pensions from abroad are subject to a flat tax rate of 5%. The initial amount of CY£ 2,000 per person is tax exempt.
· Double taxation treaties with 40 countries eliminate double taxation of foreigners residing in Cyprus. Where relief is not given under a double taxation treaty, relief from Cypriot tax is granted unilaterally.
· Tax advice is available to individuals purchasing property in Cyprus.
Work Permits
According to the aliens and Immigration Laws and relevant regulations, the authority for the issue of Temporary Employment Permits to aliens is the Migration Officer. The foreign national seeking employment must secure a local employer through personal efforts while being abroad. This employer should submit an application to the Migration Officer on his behalf.
The application should be accompanied by a short curriculum vitae of the alien, a contract of employment and copies of certificates of the alien's qualifications and work experience in the field of the proposed employment. A work permit is granted only on a temporary basis and for a specified position, provided that no suitable qualified Cypriot citizens are available and that the Public Interest of Cyprus is not negatively affected. These regulations concerning European Citizens will be lifted in time after Cyprus has joined the European Community.
