Cyprus Real Estate- Restrictions on Foreign Ownership

Even though Cyprus has gained membership to the European Union, the property laws regarding foreign ownership of property have not relaxed. Foreigners may not buy more than one property, and are entitled to hold ownership of only the following:
-    A villa in a building no larger than 3 donums    (roughly 43,000 square feet)
-    An apartment or house
-    A piece of land no larger than 3 donums for the purpose of building a house within a reasonable time frame.

Presently, EU buyers may not buy property freely due to a temporary restriction of 5 years. Non-EU buyers must get permission from the Council of Ministers to purchase property in Cyprus after a contract of sale has been signed.


Cyprus Real Estate- Buying Property in Cyprus

In Cyprus, languages spoken are mostly English and Greek, making real estate transactions a little easier.

Cyprus is a former British colony, and the Land Registry department operates similar to the British way, so title deeds are secure. Some of the larger real estate agents are equipped with an in-house attorney, but a buyer is free to hire their own.

When dealing with a newly built property, it is strongly recommended you seek out members of the Cyprus Real Estate Agents Association or FIABCI (International Real Estate Federation). With the increase in foreign interest, many small, one man developers have established themselves, and need to be treated with caution.

The following steps are involved when buying real estate in Cyprus:

1- Sign a purchase Agreement
Your agent and attorney will draft the purchase agreement once the offer for the chosen property has been accepted. The buyer and seller will then sign the purchase agreement. A deposit of 10% or 20% will be paid to reserve the property on your behalf until the closing date agreed upon.

2- Application to the Council of Ministers
To purchase property in Cyprus, permission must be granted by the council of ministers. The application must be submitted after signing of the purchase agreement. Your agent or lawyer can make the application for you.

The Council of Ministers may take up to a year to grant approval to you. While you are waiting for permission, you are able to take possession of the property. The permission to take possession is generally granted to serious, committed buyers.

3- Conduct Due Diligence
To protect you from any possible problems in the future, have your attorney perfom due diligence on the property to ensure there are no issues with the title.

4- Closing
When closing day arrives, the balance will be paid to the seller, and the title deed will be registered in your name and will be recorded at the land registry.

Cyprus Real Estate- Transaction Costs

To cover taxes and fees, commit an additional 7% of the purchase price. Commissions for real estate agents will be about 5% of the purchase price. If hiring your own lawyer, the fees will typically be between $800 and $2,000 according to the work involved.

A processing fee of 50 Cyprus pounds ($100) is needed to have the sales contract stamped and recorded at the land registry. Some of the larger developers may not charge for this step.


Cyprus Real Estate- Taxes

Transfer Tax:  A pay-only-once property transfer fee must be paid to the Land Registry. Due within 30 days of signing the contract is the government stamp duty.

Inheritance and Gift Tax:  Inheritance tax was abolished in 2000 by the Cypriot government.

Rental Income Tax: Income from rental property is subject to regular income tax rates. It is progressive from 20% to 30%.

Property Tax: The annual property tax is determined by the value of the property. The majority of residents do not pay anything.  Market values from the year 1980 on on, determine this tax. No tax apples to properties in value up to CYP 100,000 ($202,000), and on properties with a value between CYP 100,000 to 250,000 in 1980, the tax is 2%.

Taxes will be paid to municipal authorities. The annual property tax levied by them is about $40 to $80 per year. Depending on the properties value, a sewage tax between $40 to $80 may be imposed by some authorities.

Common charges will be paid when buying into a development. Possible to pay in advance monthly or quarterly the charges will vary depending on development, area and type of property. These charges cover the cost of cleaning and maintenance of common areas, gardens, swimming pools, electricity in common areas, management fees, garbage collection and repairs. Expect to pay between $500 and $900 annually.

Capital Gains Tax: When selling your property in Cyprus, a capital gains tax of 20% is applied on gains of excess of CYP 10,000 ($20,200).

Cyprus Real Estate- Financing

In Cyprus, commercial banks have authority to assist the purchase of property through mortgage facilities. The loan will be in foreign currency for foreign buyers; euros, dollars and pounds sterling. The repayment period on the loan will be up to 20 years, and the amount loaned  will range from 60% to 80% of the value of the property.