Cyprus is one of the most popular overseas real estate location in the Mediterranean. The legalities for property purchase are relatively simple. The legal framework is largely based on the British system and the land registry is an advanced and reliable process, ensuring security with regard to the Title deeds when purchasing a property.
Foreign buyers are entitled to freehold ownership of a villa, an apartment or a piece of land up to a maximum of 3 donums (4013m2).
Government approval for buying property is required for foreigners, which is granted as a routine to all bona fide purchasers.
Acquisition of TItle Deed
Transfer of ownership from seller to purchaser is accomplished through the Cyprus Land Registry Office by a simple procedure, either by the purchaser in person, or by a appointing a third party with Power of Attorney. For a non Cypriot purchaser, the prerequisite for registration is to provide evidence of payment for the property with foreign exchange, as well as the signed contract of sale. Upon issuance, the title deed will be registered in the name of the purchaser and will be recorded in the Government archives, which are confidential and inaccessible.
Submission of Application for Aquisition of Property
A written application must be submitted by the non-Cypriot purchaser to the Council of Ministers, usually performed by a lawyer on your behalf, to grant permission for acquiring immovable property in Cyprus. The application should be submitted after the contract of sale has been signed. A small application fee of £150-£200 is required, payable when permission is granted.
Real Estate Transfer Tax Fees
Transfer tax fees are necessary in order to transfer freehold ownership in 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:
Value of property in Cyprus Pounds
Transfer Fee Rate (%)
Up to 50,000
3
From 50,000-100,000
5
Over 100,000
8
For Example, if the purchase price is CY£90,000:
Value
Transfer Fee Rate
Transfer Fee
The first
CY£50,000
3%
CY£1500
The next
CY£40,000
5%
CY£2,000
Total:CY£3,500
Should the purchase be made in joint names (i.e. husband and wife, and provided that the total purchase price is more than CY£50,000) the calculation for the total transfer fee is as follows.
For Example, if the purchase price is CY£90,000:
Value
Transfer Fee Rate
Transfer Fee
The first
CY£45,000
3%
CY£1,350
The next
CY£45,000
3%
CY£1,350
Total:CY£2,700
Stamp Duty
Due at the time of signing the contract, stamp duty is levied at the rate of CY£1.50 per CY£1,000 up to the value of CY£100,000. Above that, the rate is CY £2.00 per CY £1,000.
For example, if the value (or purchase price) is CY £150,000:
Value
Stamp Duty (%o per CY£1,000)
Stamp Duty Cost
The First
CY £100,000
1.5%o
CY £150
The Next
CY £50,000
2.0%o
CY £100
Total: CY £250
Tax Benefits
Personal effects, household goods and furniture can be duty free, provided that they are for personal use. There is also an allowance for a duty free car, and retired couples enjoy the additional concession of two duty free cars.
Retirees who become residents in Cyprus are taxed on their pension from abroad at the rate of 5% for any amount exceeding £2000 annually. There is 0% on investment income (i.e. dividends and interest) brought into Cyprus. In special circumstances exemptions totalling up to £4000 per person or £8000 per couple may apply. Consequently, the total tax burden on foreign residents is in practice often only 3%. There is a tax exemption for any annual income up to and including £10,000. The same exemption applies for Cypriots also.
Additionally, Cyprus has Double Taxation Treaties with many European and other countries. The main avoidance of theses treaties is the avoidance of double taxation of income earned in any of these countries. Cyprus has Double Taxation treaties with: Austria, Belgium, Bulgaria, Canada, China, Czech Republic, Denmark, Egypt, Finland, France, Germany, Greece, Hungary, India, Ireland, Italy, Kuwait, Malta, Norway, Poland, Romania, Russia, Sweden, UK, USA, and Yugoslavia.
Estate Duty
There is no estate duty on the sale of properties purchased with foreign currency.
Immovable Property Tax
The annual immovable property ownership tax is based upon the value of the property. Certain immovable types of property are exempt.
Value of property (in Cyprus pounds)
Annual Property Tax (rate per thousand)
Up to 100,000
exempt
100,001 to 250,000
2.0
250,001 to 500,000
3.0
Over 500,000
3.5
IMPORTANT: 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
These are taxes paid to the Municipality and depend on the size and value of the property. It covers refuse collection, sewerage, street lights etc. and it varies according to the area from CY£50 - 150 annually
