A Brief Guide To Buying In Cyprus
Buying new property in Cyprus is a remarkably simple and fast process by comparison with the UK. All Alpha Panareti Public Ltd. properties are sold as Freehold with Title Deeds and, with no previous owners involved, matters are straightforward.
Price and Payment Terms
Once you have agreed a purchase price with the developer, it is usual to give an immediate initial deposit of EUR 2,500 to secure the property. This can normally be paid by Credit Card. This makes the agreement legally binding, so that no "gazumping" can take place.
A schedule will then be agreed concerning the method of payment. This is usually based on progress payments throughout the building process of your property, although it may be possible to negotiate other terms with your developer. It is, however, standard for the developer to request payment of between 20% and 30% at the time of Contract signature.
A Contract of Sale will then be drawn up, including the method of payment mentioned above.
You will be required by law to pay for your property from "external funds", i.e. from outside Cyprus.
The Cost of Purchasing and On-Going Expenses
Your fixed purchasing costs are likely to be made up as follows:
- The cost of the property plus any mortgage fees and interest
- The solicitor's fee - around EUR 1,500 to EUR 1,700
- Council of Ministers Application: EUR 170 - 340. Often included in your solicitor's fee.
- Property Transfer Tax - see below
- Stamp Duty - see below
Approval of the Council of Ministers
At this date, no UK citizen has ever been refused this approval.
This is a routine procedure that can take up to 12 months to complete, but there is no restriction on you taking full possession of your property pending the granting of the approval.
The system provides for the following:
(1) You can live in your property from the moment you take delivery of it, prior to the Council of Ministers granting approval.
(2) You can re-sell your property during this time and inheritance rights are not affected by the process.
(3) Should approval not be granted, you can re-apply.
(4) Should approval not be granted, you will have seventeen (17) years in which to sell your house.
Specific Performance
This process prevents the seller/developer from re-selling a property to another buyer and provides an absolute safeguard to the buyer until the application to the Council of Ministers has been made and approved.
The Contract of Sale must be deposited at the Land Registry within two months of being signed and stamped. Your solicitor will do this as part of his duties.
Stamp Duty
The purchaser is liable for Stamp Duty. This is charged at the rate of EUR 1.50 per thousand up to the value of EUR 170,860,14 and thereafter at the rate of EUR 2.00 per thousand. This duty should be paid within 30 days of signing the contract and your solicitor or the property developer will help you deal with it.
Example: Purchase price of property EUR 200,000
| EUR 170,860.14 at EUR 1.50 per 1000 | - EUR 256.29 |
| EUR 29139.86 at EUR 2.00 per 1000 | - EUR 58.28 |
Total Stamp Duty EUR 314.57
Property Transfer Tax
The tax is payable once only to the Land Registry and is calculated as follows:
| Value of Property (EUR) | Transfer fee rate % |
| Up to 85430.07 | 3% |
| From 85430.08 to 170,860.14 | 5% |
| Above 170,860.14 | 8% |
Method of charging: if a property has been bought jointly by two or more people i.e. if their names are on the Contract of Sale, then the cost of the property may be divided equally between those owners. The tax will then be charged to each owner for their portion, meaning that the individual cost will fall into a lower price band. The grand total will then be less.
Local authority tax
Your local authority will make an annual charge to cover such services as street lighting, refuse collection etc.
The amount depends upon the area and the size of the property and ranges between EUR 85 and EUR 308 per annum at present.
Solicitors
In general, solicitors will offer you a free consultation meeting in order to meet you, establish a relationship and give you general information about their services and the process of house buying in Cyprus. They will then charge a fixed rate for your property purchase, agreed in advance.
The solicitor will do any necessary searches on your property, draw up the contract and carry out the "Specific Performance" and Council of Ministers application. (Please see information below)
The solicitor will also be able to take your Power of Attorney if you do not intend to live permanently in Cyprus, in order to carry out official business with banks or government authorities.
Please ensure that the solicitor you choose is independent of the company from which you are purchasing.
Banks
Banks in Cyprus have very modern, up to date systems and provide a wide variety of services, including Internet banking that can be accessed from the UK. Opening accounts is a simple process.
All banks offer mortgage schemes (there are no Building Societies in Cyprus).
On-going expenses
| Value EUR | Annual tax per thousand |
| Up to 170,860.14 | exempt |
| 170,860.15 to 427,150.36 | 2.50 |
| 427,150.37 to 854,300.72 | 3.50 |
| Over 854,300.73 | 4.00 |
However, the charges are based on the current market value of the property as at 1st January 1980. In practice therefore, this means that you are unlikely to be liable for the tax as the law stands at present.
Maintenance charges
If you buy a property within a complex with shared facilities, such as communal swimming pools, gardens etc., you will probably be liable for an annual fee to cover the maintenance of these facilities. This may be charged by the developer of the property or by a management company appointed by the developer or by a homeowners' association.
This obligation should be apparent when you purchase the property although an annual fee may not yet have been fixed.
Living expenses
The utilities - electricity, water and telephone - are all billed every two months by the relevant authorities, based on metered usage.
Costs will vary widely depending on the amount of equipment in use and the time of year, but ‘average’ bills for a permanent household may be:
Electricity – EUR 50 every two months
Water – EUR 17 - 35 every two months
Home insurance
There are many, many schemes available.
If you are planning to rent out your property, ensure that the insurers are aware of this, so that public liability is covered.
As a guideline, you should anticipate paying between EUR 1.00 and EUR 2.00 per thousand euros insured.
Retirees
Alien retirees are taxed at a flat 5% per annum on pension and investment income brought into Cyprus, with exemptions totalling approx. EUR 6,800 per person.
Personal taxation
Double taxation agreements exist between Cyprus and most European countries.
Individuals permanently resident in Cyprus are taxed here on the following types of income:
- Employment income for work performed in Cyprus
- Profits from a business activity, which is carried out though a permanent establishment in Cyprus.
- Pensions in respect of employments exercised in Cyprus (except for pensions paid from a fund established by the Cypriot Government or any local authority.)
Income tax and NI
| Taxable income | Rate |
| Up to EUR 19,500 | Nil |
| EUR 19,501 to EUR 28,000 | 20% |
| EUR 28,001 to EUR 36,300 | 25% |
| above EUR 36,301 | 30% |
Employers and employees are required to make National Insurance Contributions at the rate of 6.3%.
The above information is published in good faith and is correct to the best of our knowledge, but please check the details with independent sources before relying on it.
Inheritance Tax
There is no inheritance tax (Death Duty) in Cyprus.
Selling your property
You may then immediately repatriate all proceeds, provided the initial purchase was paid for in properly imported foreign currency.
Capital Gains Tax
Capital Gains Tax is levied at 25% on profits arising from the sale of a property.
However, when "foreign" owned property is sold, there are generous allowances and exemptions from the tax. The "gain" also takes inflation into account. Remember to keep evidence of improvements to your property after taking possession of it, such as invoices, as these will be useful when the "gain" is calculated.