Cyprus Realtor

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Cyprus Property Legal Information

ACQUISITION OF IMMOVABLE PROPERTY BY EU MEMBERS
Although Cyprus has already joined the EU, Cyprus property laws have not been fully harmonised with those of the EU.  After a grace period (up to 5/2009) all restrictions on real estate purchases will be lifted in accordance to the EU directions. As an immediate step, certain restrictions have been lifted, and EU members will be able to buy two housing units, and eventually acquisitions of property will be completely free.  Offshore entities may also acquire premises for their business or for residence of their foreign employees.  Such a development is expected to increase demand of real estate sharply with the related reflection on property prices. 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.

ACQUISITION OF IMMOVABLE PROPERTY BY NON EU MEMBERS

Property Ownership

Compared to many other countries the process of purchasing property in Cyprus by foreigners is very simple.

Non-Cypriot buyers are entitled to a FREEHOLD ownership of a villa, an apartment or a piece of land, with maximum allowed extend of 4014 m2 (four thousand and fourteen square meters).  In the case where 4014m2 is not sufficient to build a single house, then a special application to the council of ministers might grant approval for the acquisition of a larger area of land.


Mortgage Finance

All commercial banks in Cyprus are authorized 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 up to 20 years.

Easy terms of payments and long-term in-house finance schemes are also available.

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.

The transfer of ownership requires two permits:

a) are from the Council of Ministers, (no longer necessary for EU members) and
b) are from the Central Bank of Cyprus.

Both permits can be easily obtained from the Cypriot authorities


Real Estate Transfer Title Fees

Real Estate Transfer tax-fees are necessary in order to transfer FREEHOLD ownership to the name of the purchaser. This can be done as soon as the relevant Government Authority has issued the title deed and the purchase has been completed. The Transferee is responsible for the tax payment. The rates are on a graduated scale.

For example if the purchase price is CYP 70,000
The first 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 C£ 50 000) the effective value for calculation is halved.
For example if the purchase price is C£ 70 000,

The first CYP 35 000 3% = CYP 1050
next CYP 35 000 3% = CYP 1050
____________
CYP 2,100

Immovable Property Tax
The annual immovable property ownership tax is based upon the value of the property.

Certain immovable properties are exempt.

Capital Tax Gains

On disposal of the property, capital gains tax will be payable at the rate of 20% on the gain with the first C£10,000 being exempt for each person. There is also an indexation allowance.

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.

Gains from the disposal of a dwelling house are exempt up to CYP 50,000 in total if the owner resides in it continuously for at least five years prior to disposal.


Stamp Duty

The purchaser is liable for the payment of stamp duty at the rate of 1.50 CY Pounds per thousand up to the value of 100,000 CY Pounds and thereafter at the rate of 2 CY Pounds per thousand.

For example if the purchase price is CYP 150 000
The first CYP 100 000 0.15% = CYP 150
Next CYP 50 000 0.2% = CYP 100
___________
CYP 250

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 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.


Tax Advantages

Cyprus is unique when it comes to the taxation aspects of living on the island.

Retirees who become residents in Cyprus are taxed on their pensions from abroad at the rate of 5% for amount: exceeding £2,000 annually.
Of course as for all Cypriot tax residents their total annual income up to £9,000 (£10,000 from 2004) is tax exempt.

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 in Cyprus.

Double Taxation Agreements

Cyprus has double-taxation agreements with Austria, Bulgaria, Canada the People's Republic of China, the Czech Republic, Denmark, Egypt, France, Germany, Greece, Hungary, India, Ireland, Italy, Kuwait, Malta, Norway, Poland, Romania, Russia, (Armenia, Belarus, Kurdistan, Moldova, Tajikistan, Turkmenistan and Ukraine) Slovakia, South Africa, Sweden, Syria, the United Kingdom, the United States, Yugoslavia (Serbia and Montenegro).

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


Duty Free Privileges

There is no import duty on cars and for retired couples there is an additional concession of two duty free cars.

Personal effects, household goods and furniture can be imported free of any taxes by immigrant retirees provided they are for personal use (and have been used for a while) or - and are not brand new, indicating prior usage.


Selling Your Property

In the event that the purchaser should wish to sell a property at some time in the future, the funds / profits from the sale can be repatriated easily to the value of the purchase price including any amounts spent on improvements and/or additions to the property. Profits can also be repatriated plus the interest earned.

Cypriot and non-Cypriot sellers can sell their properties to both Cypriot and non-Cypriot buyers.

Please note that none of the information contained in this text constitutes legal advice.