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Legal System
The legal system in Cyprus is
predominantly based on the British Legal System. The Cyprus Land Registry is
probably one of the most advanced and reliable systems in the world.
Purchasers of property in Cyprus will therefore be far more secure, with
regard to their Title Deeds, than they might be in another country.
Furthermore, legal fees /costs are reasonable and much lower than those in
other European countries. All contracts and other paperwork is translated
into English. As Cyprus is a member of the EU (from May 2004) there are no
restrictions on the size or number of properties an EU citizen may own.
Approval from the Authorities of the Republic of Cyprus
Having signed a 'Contract of
Sale' for your property, as a formal procedure, it will be necessary to make
an application to the Authorities of the Republic of Cyprus to grant that a
non-Cypriot may acquire immovable property. EU citizens that are permanent
citizens in Cyprus do not require permission to buy immovable property. For
non EU citizens this procedure may take up to three months, but in the
meantime, there is no restriction in taking possession of the property. The
main information required for completing the application is:
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Personal details of the
applicant (s) and their financial standing
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Particulars of the property
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Particulars of the present
owner
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The 'Contract of Sale' & terms
of payment
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The way of acquisition, i.e.
Freehold or Lease
Immovable Property Tax
The registered owner of the
property is liable to an annual immovable property tax, which calculated on
the market value of the property as at 1st January 1980. Hence, the tax is
much lower than the current rate and it ranges from 2% for properties with a
market value of CYPŁ100,000 250,000 to 3,5% for properties over CYPŁ500,000
Stamp Duty
Unless otherwise stipulated in
the contract, the purchaser is liable for the once only payment of stamp
duty at the rate of .15% of the market value up to CYPŁ100,000, i.e. Ł150.
and .2% for properties over CYPŁ100,000. Although the non-affixing of stamps
does not invalidate the contract, the stamp duty plus a fine will be payable
when the document is produced to the Court or any Government department. In
order to avoid the payment of a fine, which could be substantial, the
documents should be stamped within 30 days of their signing.
Land Transfer Tax
Property transfer fees are
payable once only to the Land Registry Office either personally or by an
Attorney. The amount payable ranges from 3% to 8% and it is borne by the
purchaser. The fee is due when the Title Deeds are transferred into his /
her name.
Other costs
Once everything is finalized
regarding the purchase of a property the other charges to consider are the
normal connection fees for Electricity (approx. CYP Ł75.00), Water (approx.
CYPŁ32.00) and Telephone (approx. CYPŁ100.00).
Local Authority Rates range from CYPŁ50 - Ł150 per annum, depending on the
size of the property. This tax is for waste collection, sewerage, street
lighting, etc. The basic utilities are payable individually in accordance
with consumption and based on meter readings. The electricity in Cyprus is
220-240 volts
Acquiring the Title Deeds
Following the settlement of
the agreed selling price, the Title Deeds are transferred into the buyer's
name as soon as they are issued by the Land Registry Department. The
relevant cost is borne by the purchaser, as mentioned above. Because this
process takes time and in order for the purchaser to be protected, the Land
Registry Department provides a simple and effective legal instrument called
'Specific Performance'. Once the 'Contract of Sale' is signed and a deposit
paid, the Contract is registered at the Land Registry. The Contract is then
in the hands of the Land Registry and therefore the property cannot be
leased, sold, transferred or mortgaged. This procedure protects the
purchaser's rights until the Title Deeds are issued and transferred into his
name.
Mortgage and Finance
All commercial banks in Cyprus
offer mortgage facilities. Loans are in foreign currency and the amounts
range from 60-80% of the value of the property, with repayment periods up to
25 years. Other schemes available include long-term in-house finance schemes
and easy terms of payments.
Household and Personal Effects
Having purchased a property,
non-Cypriots are allowed to import all their household goods, furniture and
personal effects - duty free! The only charge is a small fee levied on used
electrical items, which is payable at the port, at the time of entry.
Selling Property in Cyprus
Should you decide to sell your
property it will be wise to contact the Cyprus Association of Surveyors and
ask for their recommendations. A qualified valuer should also be approached
to assist in determining the value of your property.
Any outstanding property taxes must be paid and a certificate should be
obtained from the Inland Revenue. Capital Gains Tax is payable at the rate
of 20% on the gain with the first CYPŁ10, 000 being exempt for each person.
There is an indexation allowance and a further allowance regarding the
transfer fees paid. Gains from the sale of a house are exempt up to CYPŁ50,
000 in total if the owner resides in it for at least 5 years prior to the
sale. The sale proceeds can be repatriated immediately, including any
amounts spent on improvements and/or additions to the property, which have
been paid for with imported foreign currency. Profits can also be
repatriated, but note should be taken of the exchange rate at the time of
transfer of funds.
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