How to Own Your Dream Property in Cyprus
Real estate is one of the oldest dreams of mankind. To have a piece of land to call your own gives an unmatchable sense of security and accomplishment.
Real estate is also one of the safest investment bets and housing prices seldom go downwards in the long term regardless of any economic instabilities and crises. Islands with significant touristic fervor are some of the most sought-after investment destinations.
Cyprus a Cut Above the Rest
Cyprus offers a truly unique combination of opportunities to anyone wanting to invest in immovable property. It is conveniently located at the tri-junction of the proximity between Europe, Asia, and Africa. Cyprus has some of the lowest tax rates in the world along with also being a reputed EU member and in the OECD Whitelist. It has a deeply skilled human resource and some of the lowest crime rates all over the world. The cuisine is unforgettable and the sun shines to heart’s content.
Other than the obvious lifestyle advantages the Cyprus government has worked for decades to make business and investing straightforward and simple in Cyprus. The administrative procedures and formalities in obtaining immovable properties or incorporating companies are fairly time-efficient and business friendly.
In order to protect the rights of the citizens of the Republic, the rights of non-Cypriots to own immovable property in Cyprus were strictly limited. However, after Cyprus became an EU member the citizens of all EU countries are treated equally to the Cypriots regarding all matters concerning immovable property, its sale or lease etc.
For non-EU citizens, the process of owning immovable property in Cyprus is a bit lengthier. If a non-EU citizen wants to purchase an immovable property; or lease an immovable property for more than 33 years; or purchase shares in a Cypriot company which owns any immovable property in Cyprus, then they have to get the approval of the Council of Ministers for the same. This is a simple procedure and only a formality most of the times, but it can also be circumvented by buying the property through a limited company in which case there is no need to apply for the permission from the Council.
Some of the laws dealing with immovable property in Cyprus are–
- The Immovable Property (Tenure, Registration, and Valuation) Law, Cap. 224 of 1946 is the main piece of legislation governing all aspects of dealings in immovable properties. It also makes the registration of such properties mandatory if the owner must have rights in the property. Cap. 224 lays down the laws regarding registration, sale, lease holding, tenure etc.
- The Sale of Immovable Property (Specific Performance) Law of 2011 makes legislation to further protect and facilitate the purchaser of the property making it easier for them to sell their property to another buyer without having to complete cumbersome procedure with the original seller of the property.
- The Acquisition of Immovable Property (Aliens) Law, Cap. 109 deals with the aforementioned limitation on non-EU citizens for buying real estate in Cyprus. Since 2009 all EU citizens have the same rights as Cypriots in this matter.
- The Compulsory Acquisition of Property Law of 1962, deals with the acquisition of immovable property by the Cypriot government in public interest. This applies equally to both Cypriots and non-citizens. The acquisitioned property which is not put into use in 3 years must be returned. There is also provision for reasonable compensation which is free from capital gains tax.
- The Immovable Property (Transfer and Mortgage) Law of 1965.
- Immovable Property Tax Law, Cap. 322
- Rent Control Law of 1983
The Process, Taxes & Duties
The Stamp Law of 1963 lays down the requirements and fees relating to stamp duty in the country. Stamping of contracts and documents is necessary if they are ever to be used in court proceedings or they are to be submitted to the land registry in order to transfer the ownership the property in land records. The time limit for payment of the stamp duty is 30 days within the execution of the contracts. However, this can also be done within six months, and if that is missed, even after that, but the due amount in fees is significantly higher with each missed deadline.
The stamp duty is nil on contracts involving consideration less than 5000 EUR; 0.15% when consideration is 5000 EUR to 170,000 EUR; and 0.2% when consideration is more than 170,000 EUR. The upper ceiling to the final amount due is 20000 EUR.
Under the Immovable Property, (Transfer & Mortgages) Law of 1965 transfer fee is to be paid to the Land Registry Department. The amount due is based on the purchase price of the property. Up to the value of 85,000 EUR, the transfer fee is 3%; for a price in between 85,000-170,000 EUR it is 5%, and for all properties higher than 170,000 it is 8%. There are ways to get this reduced as one can fall under lesser rates of the transfer fee if there are joint owners of the property as then the value of the property is divided into two. Transfer fees are significantly reduced after the first sale of the property and in cases where there is VAT applicable, there is no transfer fee at all.
Capital Gains Tax
On selling an immovable property on the island or on disposing of shares in a company which owns property in Cyprus, the beneficiary must pay 20% Capital Gains Tax on gains accrued by such a sale. Inheritance and gifts are largely exempt from taxation and so is an exchange of immovable properties.
Things to Remember
- It is always preferable to get your contracts and documents duly stamped and registered as these give better protection to your rights. Like in the case of tenants their rights are better protected on registering the leases which are longer than 15 years.
- Registration of a property is fairly straightforward and can be done either personally or through a representative lawyer. The required documentation mostly comprises of identity proof and all relevant corporation documents in case the owner is a company, along with all the contracts and documents related to the sale of the property.
- The information of the purchaser provided in the records after registering the property is private and cannot be accessed publicly. However, the information about the property is publicly available.
- All sales and leases must be submitted in writing and notarization should be done where needed for certification purposes.
- The seller must disclose all relevant information about the property a violation of which is criminally punishable and makes the contract voidable for the purchaser.
The Cyprus government offers a chance to get Cyprus, a member of the EU, citizenship by investing in the country. There are options to invest in real estate in the country, which can also be for residential purposes, to ensure passports for the investor and their family. This has become a hugely popular option for many investors and entrepreneurs from Middle Eastern and Asian countries.
We Can Assist you in Finding the Perfect Fit
Investment in real estate often involves huge sums and can be a crucial, life-changing decision for many people. Thus, one must make sure to do all the due diligence and necessary research to ensure the best possible and errorless outcome. It is often of great importance to enquire and validate the authenticity of contracts, documents, the owner of the property, the seller and to fully understand the rights and obligations of executing the given contract. This is where professional expertise can make all the difference. Simon Zenios Co has extensive experience in various aspects of real estate dealings in Cyprus.
The knowledge of our skilled personnel has helped our clients in the past to find the best possible fit for themselves – custom cut to their exact needs. We help you to reduce taxes and duties along with finding ways to meet the requirements of strict regulations. Like splitting ownership in two to reduce the transfer fee rates or to own the property through your company to skip the mandatory permissions for non-EU citizens.
Some areas in which we provide exclusive assistance are –
- Registering Immovable Property in Cyprus
- Reselling Property
- Property Taxation in Cyprus
- Property Purchase for Non-EU Citizens
- Correspondence with The Cypriot Council of Ministers, If Applicable
- Contract Drafting
- Contract Negotiations
- Due Diligence & Verification
- Estate Planning
- Citizenship by Investment
- Residence Permits
- Sale Agreements
- Property Acquisition in Cyprus For EU and Non-EU Citizens
- Planning and Administering Estates
- Wills and Probate
For any queries regarding your real estate ambitions or any other legal matter under the sun contact us here.