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General
& legal information ABOUT BUYING A PROPERTY IN CYPRUS
1. EU
& non EU Nationals not residing in Cyprus can buy and acquire
the Title Deed to only one property on the island, (house or flat-this
does not refer to land). However this restriction only applies if
they do not have a valid residence permit for Cyprus. If they do
have a residence permit then they may purchase as many properties
as they want (refer to paragraph 6 below). To purchase a property
in Cyprus they will need the approval of the Council of Ministers-
which is a mere formality.
2.
To purchase a property an application to the Council of Ministers
has to be submitted to the District Administration office of the
District where the property is located- subject to paragraph 6 below.
A copy of the Survey Plan, Building Permit, Contract of Sale and
the Title Deed must accompany the application. When the approval
is granted- provided that a separate Title Deed to the property
is available- the purchaser can acquire his/her Title Deed.
3. For EU Nationals, there is no restriction on the number of pieces
of land they can buy-irrespective of size or their residence status.
4. The Legal System in Cyprus is based on the British Legal system
with variations in the statutory and common law precedents.
5. Information provided by Land Registries in Cyprus is accurate
and investors/purchasers can rely on the information and results
of searches provided.
6. Approval to acquire immovable property is no longer required
(according to be Immovable Property Acquisition (Aliens) Law Cap.
109, as amended by Laws 52/69, 55/72, 50/90 and 54 (1) /03, -since
1st May 2004, when Cyprus became a member of the European Union),
in the following cases:-
For EU Nationals,
who have their permanent home in the Republic of Cyprus.
For EU Nationals,
who do not reside permanently in Cyprus in cases where
he/she acquires property other than a secondary home (i.e. land).
For a legal entity (e.g. a Limited Liability Company),
that is registered according to the law of a member state of the
E.U. and which has, as per the Constitution, the Head Office, the
Central Administration and the main establishment, in the Republic
of Cyprus.
For a legal entity (i.e. company),
that is registered according to the law of a State member of the
E.U. and which has, as per the Constitution, the Head Office, the
Central Administration of the Company and the main establishment
in a member state, in cases of the acquisition of immovable property
other than a secondary home (land).
7. According
to Article 2 of the Immovable Property Acquisition (Aliens) Law,
Conditions, Restrictions, Requirements, Criteria for the issue of
approval (Amended), Regulations 2004 K.D.P. 534/2004(relates to
certificate to acquire multiple properties)
A physical person,
to whom a permit to stay in the Republic of Cyprus is granted, according
to the of Article 7 and/or 11 and/or 18 and/or 30 and/or 37 and/or
57 of free Movement and Residence of citizens of Member States of
the European Union and of the members of their families, law (N92
(1) / (2003), is considered as having a place of permanent residence
in Cyprus and
A
legal entity which is registered according to the law of
a Member State means the legal entity which has secured a certified
copy of the Certificate of Registration, the Registered Office address,
directors, shareholders (members) and secretary of the company-
according to the provisions of the company laws of the member state.
An
entity/person living permanently in Cyprus as per paragraph
7a) & b) above can easily secure a certificate that he/she can
use acquire as many properties in Cyprus as he/she wishes.
The acquisition of the certificate is very simple. The citizen of
a member state of the EU living in Cyprus can visit the District
Administration Office for the area in which he/she lives, along
with his/her passport and Temporary Resident Permit. A form, giving
their full name and address, will be filled in and a fee of CY£
5.00 is required to be paid. In a few days they will receive the
certificate, which gives them the right to acquire an unlimited
number of properties of any size in Cyprus.
Since the 1st May 2004
when Cyprus joined the European Union, EU Nationals have the right
to buy land without any restriction on size or number of plots.
8. TITLE DEEDS
a) Purchasers buying a property built some years
ago, or is one unit i.e. not part of a complex, should generally
acquire their Title Deed without any undue delay.
The procedure is similar to that in the U.K.
It is safer to appoint a local Lawyer. If the Lawyer advises that
everything is satisfactory, contracts can be signed, the payment
made and the Vendor then provides the Title Deed without delay.
b)
Purchasers of a property under construction, or just completed
or part of a project, must follow a slightly different procedure
and cannot acquire the Title Deed to their property immediately.
The Title Deeds to a new property or to properties which are part
of a project (complex), takes approximately 3–5 years, following
completion, to be issued.
Purchasers
can feel secure providing their lawyer acts as follows:
i) A
search is made to confirm that the land on which the project is
under construction, or has just been completed, is clear of any
encumbrances.
ii) Ensures
that stage payments are in accordance with the progress of the work.
iii)
That the Contract of Sale is stamped by the Tax Office and lodged
with the Land Registry for Specific Performance purposes, (Law cap
232 as amended by the laws 50/70, 96/72 and 51 (1) /95).
The lodging
of the contract with the Land Registry Office is very important
because the property is then blocked and the Vendor cannot sell
it or transfer it to anyone else-without the purchaser’s written
consent.
Whilst a vendor is able to secure a second charge on a property
this is fairly rare because in general the banks in Cyprus are averse
to second charges for their security.
In the
unforeseen event that a Developer should suffer financial problems,
the Purchasers interest, with a first charge, in the property/land
must be satisfied first. Thereafter the banks are able to have their
charge satisfied.
In the event a property is being sold, subject to a prior ( first
charge, then the purchasers lawyer must ensure that the vendors
bank provides a bank guarantee equivalent in value of second charge
of the purchase. Consequently, the purchaser is again protected.
If the contract is not lodged and registered with the Land Registry,
the Purchaser/s is unable to require the Vendor or land registry
to transfer the property in the purchaser’s name nor able
to pay the stamp duty or transfer fees) latter being payable at
the time of the issue of the title deeds to the purchaser.
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By
lodging the contract, the Land Registry is bound to accept the
value of the property as the date contract. Consequently the Purchaser/s
is/are not liable to transfer fees other than based as at the
time of the purchase.
Contracts
of purchase must be stamped- by the Tax Office--within 30 days
of signing failing which a penalty is charged and added to cost
of the stamp duty. The contract must also be lodged with the Land
Registry Office within 60 days of signing. Failure to do so may
result in the right to lodge being lost, and the contract can
then never be lodged. The purchaser would also lose his right
to ‘specific performance’ of the contract-i. e transfer
the property into its name pursuant to the terms and conditions
of the purchase contract.
The
Title Deeds take time to be issued because the Companies developing
land, must secure a building Permit, a certificate of Approval
for the building, Division Permit, a Certificate of Approval for
the Division, for submission to the Land Registry to issue separate
Title Deeds. Government Departments are presently overburdened.
Therefore, issuances of new Title Deeds are being delayed to between
2-5 years. The lack of a separate Title Deed does not prevent
a property owner from selling/assigning its property/contract.
In such instances a cancellation contract between the original
purchaser and the Vendor, and a new contract of sale between the
Vendor and the new purchaser will be required.
Purchasers
must, at time of purchase, agree any cancellation fee that the
Developer may charge, should the Purchaser decide to sell his/her
property before the separate Title Deed is issued. It is advisable
to include this agreement in the contract of sale.
9. STAMP DUTY
Before the contract is lodged in the Land Registry Office for
specific performance purposes, it needs to be stamped by the Tax
Office.
The
Stamp Duty rates are as follows:-
0.5
% on the first Cy£ 100.000= (One Hundred Thousand)
0.2 % on the balance
The
stamp duty must be paid within 30 days of signing the contract
to avoid paying a penalty.
10.
IMMOVABLE PROPERTY TAX
This tax is imposed on immovable property situated in Cyprus.
The rates are follows:
| Property
Value (Cy£) |
Rate% |
| Up
to £100.000= |
Nil |
| £100.000=-250.000= |
0.25% |
| £250.001=-500.000= |
0.35% |
| £500.001=
& above |
0.40% |
This
tax is payable annually.
Whilst
the revaluation of properties is not undertaken frequently the
precise time scale is unclear.
11.
INHERITANCE TAX
On the 1st January 2000, Law 74 (1) /2000 came into force.
This law abolished all obligations to pay Inheritance Tax regardless
of the value of the estate. The fact that there is no Inheritance
Tax to pay under Cyprus Law is encouraging people to invest in
the island.
12.
CAPITAL GAINS TAX (CGT)
The first Cy£ 10.000= (per person) is exempt. In
calculating any CGT liability the following are deductible allowances
1. Inflation
2. Estate Agents fees (provided the agent is registered).
3. Improvements and fixtures and fittings-provided these can be
established by way of receipts.
Capital Gains tax is then charged on the balance at the rate 20%.This
allowance is a once in a lifetime allowance! However any unused
allowance may be varied forward.
If, however, the property sold has been the main home of the Vendors
for at least five years, then a CGT relief/allowance of Cy£
50.000= can be claimed.
VAT
The rate of V.A.T. in Cyprus is currently 15% V.A.T. on new property
is chargeable as 1st May 2004, at the rate of 5% for a property
that is the principle place of residence, and 15% for secondary
properties. For projects, V.A.T. is payable on the selling price
of the property and land and building cannot be split.
No V.A.T. is payable in cases where an application for a Planning
Permit was submitted before 1st May 2004.
TRANSFER
FEES
When Purchasers acquire their Title Deed they must pay transfer
fees to the Land Office.
In cases where the property is part of a project under construction,
the Purchaser will generally acquire the Title Deed in approximately
3 – 5 years from the date of the possession of the property
and it will pay the transfer fees at such time.
The
Transfer Fee is the most serious expense over and above the purchase
price. It is calculated as follows:
3% on the first Cy£ 50.000= of the purchase price
5% on the second Cy£ 50.000= up to Cy£100.000=
8% on any amount over and above Cy£ 100.000=
Example:
If a property is purchased for £110.000= then the liability
is as follows:-
3% on £50.000= £1500=
5% on next £50.000= £2500=
5% on next £10.000= £ 800=
Total = £4.800.=
Two purchasers buying one property will pay less in transfer fees
as the first Cy£50.000= per person is 3%, and the second
Cy£50.000= per person is 5%, and the balance at 8% for the
joint purchasers.
Example
as above i.e. purchase price of £ 110. 000=
3% on first £ 50. 000= for each joint purchaser = £
3.000=
5% on £ 10.000= = £ 500=
Total = £ 3.500=
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