General information about Immovable properties in Cyprus
Legal & Financial
|| Many laws in Cyprus regulate matters affecting immovable property and related transactions, either directly or indirectly Y. Kontos Property management offers this information as a courtesy to provide its clients with general information about property investment in Cyprus. We believe that the best client is an informed client, and for this purpose we offer this service to our clients.
Y. Kontos Property Management does not have any responsibility for any of the following legal information. The information is subject to change without notice.
Residential permit is easily obtained for persons who have purchased property in Cyprus. All citizens of the EU enjoy their full rights and privileges as EU citizens here in Cyprus, including the right to establish residency, buy property, work or open a business. They just have to complete an application form at the immigration office for formality purposes, and they automatically receive residential permit.
For more information: http://www.cyprusvisa.eu/
For non-EU citizens the procedure to follow is very easy. The applicant needs to submit an application and provide proof that he and his family are self-supported. The following documents must accompany the application:
1. A copy of the sale/rental agreement
2. Copies of pension/retirement income
3. Any other document relevant to your income
4. Three photos and passport
The application for permanent residence may be submitted to the local immigration office in the area of residence.
In comparison to many other countries the process of purchasing property in Cyprus by foreigners is very simple. Permission to buy property must be sought from the Municipality by written application, which must be submitted by the non-Cypriot purchaser after the agreement is signed. However, this permission is granted more or less as a matter of course to all bona fide purchasers. In the meantime, however, purchasers may take possession of their property without restriction. The application to the Municipality to acquire immovable property in Cyprus can be made within a reasonable amount of time after signing the contract of sale.
EU citizens are allowed to purchase however much property they choose and do not require permission to buy. Legal entities established in EU countries that have their headquarters and registered office in Cyprus, do not require permission to buy any immovable property. Legal entities established in Cyprus and controlled by citizens of the EU require permission to buy immovable property in Cyprus as well as any other legal entities.
Non Europeans are entitled to a freehold ownership of a villa, an apartment or a piece of land, with maximum allowed extends of 4014 sq.meters (four thousand and fourteen square meters).
Properties in Cyprus are on average 20% - 30% lower in prices than Portugal, 30% - 40% lower than Spain and 50% - 60% lower than Italy and France.
Financing your Property
Most commercial banks in Cyprus are authorized to offer mortgage facilities to local as well as foreign applicants to assist in the purchase of their property. The base rate of interest for Cyprus Pound charged is specified by the Central Bank of Cyprus and currently is approximately 8%. You can also get financing from banking institutions abroad.
Y. Kontos Property management taking advantage of its strong relationships with most of the local banks can assist you in the process of contacting for its customers as well as to speed up the application process.
Financing schemes for overseas buyers can be made on their local currency and allow repayment periods of up to 15 years or in Euro with repayment period of up to 25 years.
Guaranteed Title Deeds
The procedure to transfer ownership from Vendor to Purchaser is very simple and is done through the Cyprus Land Registry Office, either by the buyer in person or by appointing a third party with a Power of Attorney. The transfer of ownership requires a permit from the District office of the town the Property is located.
Property Taxes & Fees
Below you will find a general guide to the property taxes & fees applicable when purchasing immovable property:
Real Estate Transfer
The registration fees payable to the Land Registry Office for the registration of the immovable property in the name of the applicant are as follows:
0-85,430 x 3%
85,430-170,860 x 5%
170,860 and more 8%
Immovable Property Tax
The annual immovable property tax is calculated on the market value of the property as assessed on 1st January 1980 and it refers to the immovable property registered in the name of the taxpayer on 1st January of each year. The rate of taxation is as follows:
Capital Gains Tax
On disposal of the property, capital gains tax will be payable at the rate of 20% on the gain with the first Euro17,086 being exempt for each person. The gains are the difference between the sales proceeds and the original cost of the property. In the case of a property which was purchased before 1/1/1980, the gains are the difference between the sales proceeds and the market value of the property as of 1/1/1980.
On top of this allowance, the seller is entitled to a further allowance regarding the transfer fees paid, inflation rate per year and the cost of any additions made to the house.
In sales of property used as a residence by the vendor, the first Euro 85,430 of the sale price are exempt, provided that he has been using the same as his residence for at least 5 years prior to the sale.
The purchaser is liable for the payment of stamp duty at the rate of Euro 2.56 per thousand up to the value of Euro170,860 and thereafter at the rate of Euro3.42 per thousand. This should be paid within 30 days of signing the contract.
Local Authority Taxes & Rates
A rough guide could be approximately Euro 85-250 per year depending on the size of your property. This tax is for refuse 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.
Since 1/5/04 a statute in respect of VAT on properties was introduced. In addition to other amendments, this statute introduced VAT on the rate of 17%. Properties with building permit before 01/05/04 are exempted of V.A.T.
Cyprus is unique when it comes to the taxation aspects of living on the island.
The following income tax rates apply to individuals:Retirees who become residents in Cyprus are taxed on their pensions from abroad at the rate of 5% per annum while an exception for the first Euro 3,417 is granted. Additionally, Cyprus has Double Taxation treaties with many European and other 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.
Double Taxation Agreements
Cyprus has double-taxation agreements with Austria, Belarus, Belgium, Bulgaria, Canada, China, the Czech Republic, Denmark, Egypt, France, Germany, Greece, Hungary, India, Ireland, Italy, Kuwait, Kyrgyzstan, Malta, Mauritius, Norway, Poland, Romania, Russia, Singapore, Slovakia, South Africa, Sweden, Syria, Tajikistan, United Kingdom, United States, Yugoslavia (former).
The main purpose of these treaties is the avoidance of double taxation of income earned in any of the above countries. A credit is usually allowed against the tax levied by the country of the tax payer's residence for taxes levied in the other country. Treaties are under negotiation with another 23 countries.
Duty Free Privileges
Europeans who become permanent residents in Cyprus and were using in their country a car for at least six months, can bring their car to Cyprus and they will not pay import tax.
Furniture can be imported free of any taxes by Europeans or Non-Europeans who become permanent residents provided that they are for personal use and are not brand new.