CONTRACTS AND PAYMENT

We will confirm with the client the price of the properties that they are interested in, bringing to their attention any additional costs. At the end of the Inspection Tour, and once the client has settled on the home that they intend to purchase, they will be asked to pay a builder's deposit and sign a contract with the developer or builder. Throughout this process, we will be on hand to advise them and to answer any questions that they might have and help them talk to the developer.
Once they have signed the contract, they will have reserved the home and the developer will not be able to offer it for sale to anyone else. After 30 days, the first stage payment of 30% (less the initial deposit) will be due. Payment for properties in Cyprus is usually made in stages (see table below) throughout construction, and the process is finished when they pay the final balance at completion.

TWO PLANS OF PAYMENT TERMS

PERMISSION TO BUY PROPERTY

Permission to buy property must be sought from the Council of Ministers by written application, which must be submitted by non-Cypriot purchasers after the agreement is signed. However, this permission is granted more or less as a matter of course to all bona fide applicants. In the meantime however, purchasers may take possession of their property without restriction. The application to the Council of Ministers to acquire immovable property in Cyprus can be made within a reasonable amount of time after signing the contract of sale.

LEGAL ADVICE

Every property purchase requires sound legal advice, regardless of which country it's in, and so we always recommend that clients seek out the services of a solicitor who has prior experience of helping foreign nationals to acquire Cypriot property. We are able to make introductions to reputable solicitors who will be able to help throughout the process, and they will be happy to answer questions from the outset.
The solicitor will make a series of land and deed searches and will go through the details of the contract offered to by the developer before it is signed to make sure that the clients interests are well protected under Cypriot law.

BANKING

While it's not strictly speaking a necessity that a buyer has a Cypriot bank account right from the outset, it will prove helpful to them as they go through the purchase process - and even more so once they own a home in Cyprus. In keeping with a modern thriving economy, the banking system on the island is well developed and reasonably straightforward, and with our help, clients will find opening an account easy.

Mortgage Finance

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. Taking advantage of our strong relationships with most of the local banks, and in an attempt to reduce your financial costs as well as to speed up the application process, we can assist you to arrange your mortgage on more beneficial for you terms as follows:
The mortgage can be granted in Foreign Currency (e.g. EURO, USD, GBP, CHF, YEN...)

• The maximun repayment period can be up to 30 years.
• 30% deposit of the value of the purchased house
• The age of the applicant cannot exceed the age of 70.
• The maximum amount borrowed can be up to 70% of the value of the purchased property. In some rare cases we can go up to 80%
• There is a grace period (within which no mortgage repayments to be made) until the property is completed (normally within 18 months to 24 months)
• Then 5 years payments at interest only
• The mortgage is repaid by monthly or quarterly installments.

Documents/Information required by the banks:

1. Customer's profile (Personal details, occupation-duration of your employment contract if any with your current employers).
2. ID copies
3. Statement of existing debt (if any).
4. A reference Letter from the Bank you maintain an a/c with.
5. Completion of the Declaration of Personal Income form.
6. Evidence of income either pay slip or confirmation of remuneration from your employer or business accounts.
7. Purchase agreement.
8. Copies of bank statements for the last three months.
9. Copies of payments already made by the applicant for the property.
10. To open and activate an account with the bank.

RESIDENTIAL PERMIT (EU Citizens)

A Residents Permit is easily obtained for persons living in Cyprus, who have purchased a property. This is not however a pre requisite of owning Cypriot property.

PROPERTY OWNERSHIP

In comparison to many other countries the process of purchasing property in Cyprus by foreigners is very simple. Non European Union nationals 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). Restrictions for EU nationals are effectively lifted.

LEGAL SAFEGUARDS AND GUARANTEES

The Cypriot legal system has a series of safeguards to protect the rights of a property purchaser, most particularly through a legal instrument called "Specific Performance”. This recognises a purchaser who lodges their purchase agreement with the Land Registry within 60 days of signature. The solicitor will make sure that all of the relevant paperwork is processed correctly.

THE 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 a Power of Attorney. The transfer of the title deeds can often take several years to take place. This does not however affect the rights of the owner or their ability to re sell.

INHERITANCE TAX

Inheritance Tax has been abolished in Cyprus since 1 January 2000.
To help our clients in the decision making process we suggest it's wise to have a budget in mind - and not just for the purchase price. The client also needs an understanding of the costs of the taxes and stamp duties they will be asked to pay, the likely cost of legal advice and the ongoing costs of life in Cyprus.

EXAMPLE OF ADDITIONAL COSTS ASSOCIATED WITH PURCHASE

LEGAL FEES

These are usually 1% of the property price.

Real Estate Transfer

Real Estate Transfer fees are imposed by the Lands Registry in order to transfer freehold ownership to the name of the purchaser. The transfer fees are due for payment when the transfer of the title deed in the name of the purchaser takes place. The Purchaser is solely responsible for the payment of the transfer fees. The rates are on a graduated scale.

If the property is in joint names e.g. of a couple (husband and wife) or two individuals, then the purchase value is divided into two parts which results in reduced transfer fees. Each buyer is taxed on their share, so €170.860 is taxed at 3% as the two buyers are taxed at 3% on their €85.430.

In an example with 200,000 Euro purchase price it looks as follows:
 
a) one buyer:
    3% on € 85.430,00 = € 2562,90
    5% on the next € 85.430,00 = € 4271,50
    And then
    8% on the remaining € 29.140,00 = € 2331,20
     Total = € 9165,60

b) two buyers
    3% on € 85.430,00 (buyer A) = € 2562,90
    3% on € 85.430,00 (buyer B) = € 2562,90
    5% on € 14.570,00 (buyer A) = € 728.50
    5% on € 14.570,00 (buyer B) = € 728.50
    Total = € 6582,80
    In our example the buyers save € 2582,80 if they register the property on both names.

STAMP DUTY 

Before the contact is lodged with the Land Registry; it is stamped by the tax office which charges a fee of 0.15% on the first 070.860 and 0.2% on any amount above this. 

IMMOVABLE PROPERTY TAX 

The annual immovable property tax is imposed on the market value of the property as at 1st January 1980 and applies to the immovable property owned by the taxpayer on 1st January each year. 

VAT (Value Added Tax)

Since 1/5/04 a new statute in respect of VAT on newly-constructed properties has been introduced. The rate of VAT in Cyprus is currently 15%.

Capital GAINS TAX

On gains from disposal of immovable property situated in Cyprus, capital gains tax will be imposed at the rate of 20% with the first 07,086 being exempt for each person. The gain is 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.
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 private residence are exempt up to €85,430 in total if the owner resides in it continuously for at least five years prior to disposal.
Gains from the disposal of a dwelling house are exempt up to €85,430 in total if the owner resides in it continuously for at least five years prior to disposal.

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, Serbia and other countries. 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.