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Law and Tax

Property Ownership
As a non-Cypriot you are entitled to a Freehold ownership of a property or a piece of land up to 4,013sq/m (an equivalent of 43,195 square feet). Offshore entities may also acquire property in Cyprus, for their business purposes and/or for their employees' residential needs. Permission to transfer the property bought to the non-Cypriot's name must be sought from the Cyprus Council of Ministers. The application to the Council of Ministers to acquire immovable property in Cyprus can be made within a reasonable time after signing the contract of sale.

Property Registration/Transfer 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:

 
Value of properties in Euros Transfer fee rate (%)
Up to 85,500 3
From 85,500-171,000 5
Over 171,000 8
 

For Example, if the purchase price is EU€ 153,900:

Value Transfer Fee Rate Transfer Fee
The First € 85,500 3 % € 2,565
The Next € 68,400 5 % € 3,420
    Total: € 5,985
 

IF the purchase be made in joint names(i.e. husband and wife, and provided that the total purchase price costs over 85,500 EURO) the calculation for the total transfer fee is as follows:

For Example, if the purchase price is EURO€ 153,900:

 
Value Transfer Fee Rate Transfer Fee
The First € 76,950 3 % € 2,308.5
The Next € 76,950 3 % € 2,308.5
    Total: € 4,617
 


Stamp Duty

After signing the contract, stamp duty has to be paid. Stamp duty is imposed at the rate of €2.56 EURO per € 1,710 EURO up to the value of € 171,000 EURO, and above that the rate is €3.42 EURO per €1,710 EURO. It should be paid within 30 days after signing the contract.

For Example, if the value is EURO€ 256,500:

  Value Stamp Duty (% per € 1710) Stamp Duty Cost
The First € 171,000 1.5 % € 256.5
The Next € 85,500 2.0 % € 171
    Total: € 427.5


Immovable Property Tax

Value of Property (in EURO) Annual Property Tax (rate per thousand)
0 – 170,860.1 No Tax
170,861.85 – 427,150.36 2.5
428,858.96 – 854,300.72 3.5
Over 854,300.72 4

IMPORTANT: This 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
Depending on the size of your property, you have to pay an amount something between € 85-255 per year. This tax is for garbage collection, street lighting, sewerage, etc...

Acquiring 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 (i.e. a Licensed Estate Agent ) with a Power of Attorney. Contracts of sale should be logged at the Land registry office within 60 days of the contract date to ensure the buyers rights to the property. When Title deeds are issued they are registered in the name of the buyer and filed in government archives. These are confidential archives and are not published or made public under any circumstances.

Residential Permit
Residential Permit is easily obtained for persons living in Cyprus, who have purchased property.

Temporary Permit
It requires the existence of a bank account in Cyprus and a sales agreement of the property purchased. Temporary residence status can be from 1 – 4 years.
Permanent Permit: In addition to the above requirements, the applicant must provide evidence of a secured annual income of not less than € 9.063 for a couple. Temporary residence is easy to obtain once the applicant fulfills certain requirements. To apply for temporary residence a visit to the local immigration office should be arranged and produce the following documents

  • A certificate from a local bank stating that the applicant is a holder of an external account at that bank and stating the balance of the account. Obviously, the larger the balance, the more favorably the applicant will be seen
  • Passport
  • 3 photos
  • € 34,00
  • Copy of Rental Agreement or Sales Contract

Selling your Property
You can sell the property at any time and with no restrictions. However there are two different cases:

a) If the property is sold to a non-Cypriot who is paying from external funds, then the whole amount can be repatriated without any requirements.

b) If the property is sold to a Cypriot, who is paying in Euro then the seller is entitled to repatriate an amount equal to: a) what he paid to buy the property, b) plus any other (proved) costs involved with additions or extensions of the property, c) plus the transfer fees, d) plus the inflation, e) plus € 85,500 per person per year.

Taxation
The U.K./Cyprus double taxation treaty, which is unique in this respect enables United Kingdom pensioners to remit both government as well as private sector occupational pensions to Cyprus free of withholding taxes in the United Kingdom. The relief offered to British government pensioners resident in Cyprus is unique, and generally not available elsewhere under the terms of other U.K. double taxation treaties. Similarly foreign retirees living in Cyprus are taxed at only 1/10th of the local rate; foreign retirees pay income tax at the rate of 5% per annum on all imported pensions, with an annual exemption of the first € 3,420.

Tax Benefits
Cyprus levies taxation only on a remittance basis, that is, it taxes only assets that are brought into Cyprus, rather than the more punitive system of taxation on world-arising income that is practiced in may other countries. Residents of Cyprus can thus legally hold assets tax free in banks in tax havens such as the Isle of Man and Jersey, and suffer no taxation on bank interest or dividend income remaining outside Cyprus. No capital gains tax is charged on the remittance of capital assets to Cyprus such as money needed for the purchase of property and other similar capital assets such as motor vehicles.

Increasingly, Cyprus is used as a residential base for former residents of the U.K. Who wish to restructure their personal assets in a favorable tax jurisdiction, where U.K. capital gains tax and income tax exposure can be effectively and legally minimized.

Duty Free Privileges
A duty free car is one example of the privileges available to persons retiring to this lovely Island. A medium size saloon car will cost just over half the U.K. price. 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.

VAT
As of May 1st 2004 VAT is added on the price of new properties ONLY. VAT stands at 15%. Please note that first time buyers are allowed a return of 10%. However all properties for which a valid application for Planning Permit was submitted at the Town Planning Department before the 1st of May 2004 are fully exempted from VAT.

Capital Gains
Subject to numerous exemptions and indexation, a 20% charge is levied on the profit. A 85,430.10 EUR tax-free allowance is made for own house provided that is your residence for five years and 17,860.1 EUR for other property. Other discounts include any payments made for the improvement of the property or for any additions on the property as well as the inflation rate.

Title deeds
Title deeds are issued by the Land Registry Office, which is the only competent government department to register charge and transfer immovable property. Examination of the Title Deeds or Certificate of Registration of the Immovable Property is essential.

By examining the registration certificate we ascertain the following:

1. Identity of the property (in other words the Title Number and the location of the property)
The title number and sheet/plan are unique elements, identifying the property and distinguishing it from any other property. The location of the property is mentioned on the top left-hand side of the certificate, whereas the registration and the title number and sheet/plan, on the top right-hand side. The size of the immovable property is mentioned at the top left-hand side, expressed in square meters (one decare is equivalent to 1000 sq.m and a hectare to 10,000 sq.m.). Old property titles mention donums and evIeks (one donum is equivalent to 1338 sq.m and one evIek is equivalent to 334.5 sq.m). In the case of apartments, the number on the door and the floor on which the apartment is located are also mentioned. As regards the size of the apartment, new title certificates analyse the meters of the apartment and the meters of the covered verandas separately, as well as the percentage that the apartment is entitled to in the common owned areas.

2. Owner of the Immovable property
The owner of the immovable property may be a person or persons or a company or companies. They are referred to by their identity card number and in the case of companies by the registration number allocated to them by the Registrar of Companies. The share owned by the owner is mentioned on the left-hand side of his name in fractions or in full e.g. the whole part or ½ or Ό or 32/74. Apartments and houses, which have been built in the context of a unified development plan, have a separate title each. Where more than one person owns the immovable property, a specific examination is necessary.

3. Charges
An immovable property may be burdened with the following charges:

a) Mortgage

It is registered under the name of the mortgage creditor in person, with the consent on the owner.

b) Interim Order

c) Memo

It is the commonly known memorandum. When a creditor secures a Court decision in his benefit, he may register such decision at the Lands Registration Office and charge the immovable property registered under the name of his debtor, for the purpose of turning such property into a guarantee for the collection of the agreed debt.

d) Deposition of the Contract of Sale to the Land Registry Office

The contract of Sale may be deposited to the Lands Office in favour of the purchaser, following the payment of the stamp duty and the stamping of the contract. Such deposition prevents the property from being sold twice and grants the purchaser certain rights and priorities as regards the immovable property.

In addition, it is an indispensable precondition for the specific performance procedure in front of a Court of Law, as provided for by legislation. Where the above procedure is successful, it ends up with a Court Order to transfer the property to the name of the purchaser.

4. Rights
Any rights related to the immovable property such as access fees etc are mentioned on the title. Apartment titles mention the percentage of service charges as per the joint ownership property, parking places, storage places or garden.

Contract of Sale
1. Drafting the Contract of Sale

An advocate usually drafts the Contract of Sale. Such contract must contain all elements required by the Law for a valid and binding agreement including the following:

a) The name and particulars of the Contracting Parties.

b) Full particulars of the immovable property to be sold, such as the topographic plans etc, inventory and any other indispensable particulars.

c) Price of sale, terms of payment and foreseen interest.

d) Date of delivery of freehold and consequences of non-delivery.

e) Time of transfer and obligations of both parties for the preparation, such as the issue of a freehold title by the vendor and the 'relevant permits by the purchaser.

f) All those particulars such as an insurance coverage and stamping.

2. Deposition of the Agreement to the Land Registry Office

It may be done in person and/or by the advocate of the Purchasers.

Transfer of property from the vendor to the purchaser
1. Permission of the Council of Ministers

A permission granted by a committee (district officer) under the instructions of the Council of Ministers is needed in order to transfer immovable property to aliens (non-EC residents). For acquiring such permission, an application, must be accompanied by the documents mentioned below:

a) A site plan

b) A copy of the property title

c) A copy of the building permission

d) A copy of the contract of sale

e) A plan view of the house or apartment

f) The area of the immovable property to be acquired

g) A bank reference and a bank statement of the applicants

h) Copies of the pages of the passports of the applicants and of their spouses

i) The marriage certificate of the applicants or a relevant certification of their embassy, where the spouses do not have the same surname and where the name of the husband is not mentioned on the passport of the wife.

j) A copy of the residence and work permit of the applicants in Cyprus EC citizens who are residents of Cyprus do not need the permission of the Council Of Ministers. They only need to prove that they are residents in Cyprus.

k) Registration number from the Immigration Office (pink slip)

l) Application to the District Office

2. Transfer
The transfer in the name of the purchaser is affected either in person or through a representative, by means of a Power of Attorney certified by a certifying officer. The following is needed for transfer:

a) Free property title

b) Stamped Contract of Sale

c) furnish of receipts of payment of all fees, charges and taxes burdened on the immovable property being transferred. Such fees, charges and taxes may be one or more of the following: (i) Immovable property tax, (ii) Urban immovable property tax, (iii) Capital gains tax, (iv) Inheritance tax (if applicable).

d) Certificate of payment of liabilities issued by the Sewage Board

e) Municipal fees

f) Community fees

g) Land Registry fees

The procedure of acceptance of the transfer is concluded by the calculation of the registration fees from the Land Registry Officers and their payment by the Purchaser to the Land Registry Office. The level of fees depends on the type of transfer and it is either calculated on the estimated value or on the purchase value of the immovable property. Estimated value means the value of the immovable property as it has been registered in the records of the Land Registry Office. If the purchaser has taken a bank loan or a loan from another organisation, the transfer and mortgage in benefit of the creditor, take place simultaneously. The Land Registry Office issues a new property title under the name of the purchaser and forwards it to the purchaser, following the transfer.