Cyprus’s real estate industry is a crucial part of the nation’s economy. This is a result of the large percentage of locals who own their homes, as traditionally, Cypriots like to own their homes. Also, foreigners have a considerable interest in owning real estate as investments and second homes or vacation homes due to the high return on investment (ROI) or due to the all the other benefits that exist in the real estate and immigration sectors.
Immovable property legislation in Cyprus was enacted in 1946. It is recognized as the cornerstone of immovable property in Cyprus and deals with all issues pertaining to the tenure, registration, disposal, and valuation of immovable property within the framework of the immovable property definition, drawing, and valuation system in Cyprus.
Cyprus’s Department of Lands and Surveys was started in 1858. It is regarded as one of the most cutting-edge, dependable, and trustworthy systems worldwide. It was established using the British model as a foundation, started around 1912 and was concluded in 1920. Since then the Land Registry Department it keeps updating.
At the Department’s Registries, every interest or right over or affecting immovable property (land, buildings, trees, plantations, rivers, wells, and other rights connected to estate and structures) is recorded and traceable.
Cyprus property buyers will feel very safe because any information pertaining to their potential purchase can be found from Land Registry Department and documents before the transaction is finalized. Also, their contract of sale or title deed transfer is recorded or occurs at Registry following the purchase.
EU nationals do not need a permit to purchase real estate in Cyprus, according to Cyprus property legislation. EU nationals are given the same rights and privileges as Cyprus citizens, including the unlimited acquisition of real estate. They are permitted to register any number of properties under their name.
Non-EU citizens are permitted to purchase real estate property in Cyprus, but they must first request authorization to register the property in their names. After the purchase agreement is signed, this application is delivered to the district office of the city where the property is located so the authorisation procedure can be initiated.
All purchasers most of the times are granted permission, and this procedure is currently merely a formality. Permission takes approximately 1-2 weeks to obtain.
Permission is granted with some restrictions that apply to each family (husband and wife); the restriction is two units to be purchased from the list below:
House or apartment.
A villa on a plot of land up to 4014 m2.
A plot of land measuring up to 4,014 m2 if a house is to be built soon.
Permission may be granted under certain conditions for the acquisition of larger plots of land or other property types (offices, commercial, industrial, etc.).
Step 1: Perform due diligence
After deciding on a property to purchase, it is critical that the lawyer conduct a full due diligence check on the property, which should include the following:
Confirming any mortgages or burdens or memos or encumbrances or liens or any other obligations the property is burdened. Usually this is done through the Department of Lands and Surveys by ordering a full search on the property. The above ‘Property Search’ is ordered and it takes usually 3-4 working days to be obtained. With this document the Lawyer will see if any of the above exists and anything that appears on the Property Search has to be cleared. This procedure sometimes can be time consuming if the property is under Memos through Courts and/or under Mortgages that are not serviced. Despite the above our LAw Firm will take all measures to clear the above so the property can be prepared to be transferred free and clear to the name of the Purchaser/s. In case of any mortgages the lawyer arranges for the so-called waiver, which is a critical document that makes your sales contract take precedence over any existing liabilities of the seller to the bank in relation to the property.
Payment terms should be negotiated.
If the property is under construction, ensure that all necessary Town Planning and Building Permits have been obtained, and that the Architectural Plans are approved from the above Governmental Departments and that they are fully stamped showing the date of the approval. All of the above should always be attached to the contract. The Contract should also have all the specifications, delivery dates and any other particular that it is agreed between the parties.
In the case of a land purchase, to confirm the building Zones (the number of square meters that can be built on) and that the intended use of any planned buildings is permitted. In addition, to ensure that utilities can be connected to the property and that either a right of way or a road is servicing fully the property meaning that the property has access to the above.
Step 2: Reservation Deposit & Agreement
After signing the reservation agreement and paying the reservation deposit, the property is removed from the market for a set period of time until the contract of sale is prepared and the parties are ready to finalize the transaction.
Reservation deposits usually range from 2-3% of the purchase price depending on the property unless otherwise agreed.
Step 3: Sale contract
After completing all of the preceding steps, the buyer and seller sign a contract of sale.
If the Purchaser is abroad, the entire transaction can be completed via Power of Attorney. It can be signed and certified in Cyprus or abroad at the Cyprus Embassy or Consulate, or it can be notarized and stamped with an Apostille Stamp.
Following the signing of the contract, the lawyer applies to the so-called Council of Ministers for a permit to purchase the property (this is required for non-Cypriot buyers and is merely a formality, as previously stated).
Step 4: Registering the sale contract with the Department of Lands and Surveys.
When the contracts are signed, the Purchaser’s lawyer takes them to the Inland Revenue Department to be stamped. Depending on the purchase price, stamp duties are payable on each contract for the purchase of real estate (as below).
When the signed contracts are stamped, the Purchaser (or his lawyer or representative) should take them to the Land Registry Department to be lodged/registered for Specific Performance purposes.
The contract is stamped and recorded by the Department of Lands and Surveys Until a separate title deed is issued, it secures the buyer’s ownership rights for specific performance purposes.
Step 5: Title deed transfer
If the seller has a Title Deed (ownership certificate) for the property, the title deed can be transferred to the new owner immediately. This is usually the case when purchasing a resale property.
In most cases, if the property is brand new such as apartments or houses or new buildings, the seller (developer) does not have a separate title deed for the property. Until the separate title deed is issued , the buyer’s ownership rights are protected by the registration of the sales contract at the Department of Lands and Surveys.
Every Property Sales Purchase Agreement in Cyprus must be stamped as shown below:
|
Amount (€) |
Percentage |
|
First €5.000 |
0 |
|
From €5.001 – to €170.000 |
1.5‰ |
|
Over €170.000 |
2‰ |
Every Property Sales Purchase Agreement in Cyprus must be stamped as shown below:
|
Market Value (€) |
Rate |
Current Rate at 50% |
|
First €5.000 |
0 |
1.5% |
|
From €5.001 – to €170.000 |
1.5‰ |
2.5% |
|
Over €170.000 |
2‰ |
4% |
On the sale of new real estate projects, VAT at the rate of 19% is payable whereas on a resale property VAT is not levied.
The reduced VAT rate of 5% on the purchase of a primary and permanent residence in Cyprus
Anyone purchasing their first permanent residence in Cyprus is eligible for a 5% VAT reduction.
The reduced rate of 5% VAT applies to the first 200 m2, while the standard VAT rate is applied to the remaining square meters, as determined by the buildable area.
Only the internal covered areas are included in the square meters for VAT purposes (do not include covered verandas or other).
The property must be used as the primary place of residence in Cyprus for the next ten years; rental is not permitted.
The VAT on plots is 19% at the standard rate for the supply of undeveloped building land. The VAT is levied when the supply is intended for the construction of one or more structures and falls within the scope of a person’s economic or business activities.
It should be noted that the supply of land is exempt from VAT if it is a one-time transaction.
Cyprus Capital Gains Tax is imposed at a rate of 20% on gains from the disposal of immovable property in Cyprus (when the disposal is not subject to income tax). Gains from the sale of shares in companies that directly own immovable property are included.
Physical Entities/Individuals can deduct from the Capital Gains Tax in Cyprus as shown below:
Physical Entities can deduct from the Capital Gains Tax as follows:
| Sale of Private Residence (Based on certain conditions) | €85.430 |
| Sales of Agricultural Land by a Farmer | €25.629 |
| Any other transaction | €17.086 |
Cyprus inheritance Tax was abolished as of the 1st of January 2000.
• Inspecting the property prior to Purchase
• Completing a detailed Due Diligence Report and advising on the procedure to be followed based on the findings
• Drafting the Property Reservation Agreement
• Drafting and finalizing the Sales Purchase Agreement
• Granting Permission, the Purchaser to purchase a property in Cyprus as a third Country National
• Preparing Specific Power of Attorneys
• Stamping the Sales Purchase Agreement to the Tax office and Registering it to the Department of Lands and Surveys
• Land Registry Services including but not limited to the transfer of properties, border disputes, issuing title deeds
• Gift Transfers of Real Estate Properties meaning transfers of a first-degree relatives
• Drafting Lease Agreements
• Inspecting the property prior to Purchase
• Completing a detailed Due Diligence Report and advising on the procedure to be followed based on the findings
• Drafting the Property Reservation Agreement
• Drafting and finalizing the Sales Purchase Agreement
• Granting Permission the Purchaser to purchase a property in Cyprus as a third Country National
• Preparing Specific Power of Attorneys
• Stamping the Sales Purchase Agreement to the Tax office and Registering it to the Department of Lands and Surveys
• Land Registry Services including but not limited to the transfer of properties, border disputes, issuing title deeds
• Gift Transfers of Real Estate Properties meaning transfers of a first degree relatives
• Drafting Lease Agreements
