IT IS THE RIGHT TIME TO INVEST IN CYPRUS
It is widely accepted that buying immovable property is the best investment can anyone make.
Cyprus attracts both investors and those looking for a stunning and sunny place to live, work or retire. Due to relatively low cost of living, the high quality of lifestyle and high standard of living, the attractive climate, the knowledge of English language by the vast majority of the population, secure and safe environment for the family, the high standard of education across all sectors, the favorable policy to obtain a permanent residence permit by acquiring a Property in Cyprus and the highly successful Citizenship by investment programme, the lowest corporate tax rate 12,5%, Cyprus has always been considered to be an increasingly popular destination by foreign buyers.
Seek Professional Legal Advice and Assistance
When you decide to acquire a Property in Cyprus, it is wise to seek professional legal advice. The Lawyer of the Purchaser will usually verify the ownership of the property by the seller and further carries out an official search at the Land Registry to confirm the registration of any encumbrances or charges over the property and also the availability of all necessary permits with reference to buildings erected thereon.
The Purchaser may appoint qualified engineers or surveyors to carry out structural or other surveys to verify the market of the property.
After proper investigations are conducted, a contract of sale is executed between the parties so that they are legally bound to complete the transaction. The terms of the agreement are negotiated in a fair and balanced way and the necessary formalities are complied in accordance to the law and regulations.
The Contract of Sale sets out the parties, description of the property, the amount of the purchase price, the mode of payment, completion date and may include warranties and/or contractual representations.
Stamping the contract in accordance with the provisions of the Stamp Law and depositing it at the Land Registry Office under the Sale of Immovable Property (Specific Performance) Law 2011 avails the buyer with the additional protection of a specific performance order which gives the right to enforce by a Court Order the Vendor to transfer the property into the name of the Purchaser if the Vendor fails. Registration of the Contract of Sale with the Land Registry Office prevents the Vendor from transferring the property elsewhere or encumbering it for as long as the contract is valid and legally effective.
Within 6 months of signing the Contract, the same must be filed at the Land Registry Office.
The purchaser is responsible for paying the stamp duty and transfer fees.
A Contract of Sale must be fully stamped by the Tax Office and then may be lodged in the Land Registry Office for specific performance purposes fully stamped by the Tax Office. The Contract should be stamped within 30 days of its signing. The rates are as follows:
For contracts up to €5,000 there is no stamp duty available.
€5,001 – €170,860 ——-> 0.15%
€170,861 – €8,543,000 –> 0.20%
Over €8.543.000 €17.086
The transfer fees payable to the Land Registry Office depend on the value of the immovable property, not always on the exact amount paid by the purchaser (purchase price) but are calculated on the market value of the property as at the date of the transfer. The transfer fees are payable at the time the transfer is effected.
The rates are as follows:
Value of Property € Transfer fees rate % Accumulated Tax €
0 – €85,430.07 — 3% — 2,562.90
€85,430.08 – €170,860.14 — 5% — 6,834.40
over €170,860.15 — 8%
As a result of special measures introduced by the Government to further revive the property market, for transfers that take place before the 31/12/2016:
- No Transfer fees are payable, if VAT was paid on the property
- Transfer fees are reduced by 50% if VAT was not paid on the property
- VAT (Value Added Tax): The rate of VAT is 19%.
- VAT is chargeable at the standard applicable rate on the first sale of new buildings or the land on which they stand if the application for a planning permit was submitted after 1/05/2004.
- No VAT is charged on subsequent sales or on the sale of undeveloped land or the leasing or letting of a property.
- 5 % VAT applies to both EU and non-EU Nationals who purchase property for use as their primary and permanent place of residence for the next 10 years. This rate applies for the first 200 sq.m. of residences with a total covered area of up to 275 sq.m. to Contracts concluded from 1/10/2011 onwards for the acquisition or construction of residences.
- Local Authority Tax: Property taxes levied by the local authorities are payable annually and may vary, depending on the size of the property. The tax covers the cost of garbage disposal, street lighting, etc.
- Inheritance Tax: There is no inheritance tax in Cyprus
- Capital Gains Tax: Capital Gains Tax is the tax imposed on gains from disposal of immovable property situated in Cyprus including gains from the sale of shares of companies which own immovable property situated in Cyprus. The capital gains tax is calculated on the balance at the rate of 20%. The first €17.086 (or €85.430 in the case of private residence for at least five years prior to disposal) is exempt. The capital gain is calculated after deducting from the sales proceeds the original cost and any additional expenditure, adjusted for inflation(calculated by reference to the Retail Price Index issued by the Department of Statistics every month), and any allowable expenses directly related to the disposal of the building such as interest on loan and advertising. These deductions are granted once only.
Our guidance to potential buyers is that they must obtain legal advice and advice from a reliable property consultant. The complexity of the legislation and regulations relating to the acquisition of immovable property in Cyprus renders it necessary to seek at the outset professional legal advice in order to avoid any adverse consequences that could arise where sufficient care is not taken.