Buying & Selling Property
BUYING & SELLING PROPERTY IN CYPRUS & OTHER USEFUL INFORMATION
THE PROCEDURE IN BRIEF
According to Cyprus Law the purchasers need a written contract of sale, which will be stamped and lodged at the Land Registry Office for specific performance purposes. This gives the purchasers the security of a legal charge over the property which will remain up until the time of transfer of the title deeds to them. The purchasers must lodge the contract of sale at the Land Registry Office within six months from the date of signing. Otherwise the purchases will not be able to specifically enforce the transfer of the property to them through the Court, but will only have a claim in damages for breach of contract, in the event that the Vendor/s fail to transfer the title deed to them.
Non-European citizens must apply to the Ministry of Interior for permission to acquire immovable property in Cyprus, so as to be able to accept the transfer of the Title Deed to their own names.
European citizens do not need any permission to buy any property in Cyprus.
Any Company that is registered in Cyprus or in any member country of the European Union, even if the shareholders are not European Citizens, will be allowed to purchase immovable property in Cyprus without having to apply for the above said permission.
The contract of sale must be duly stamped and the stamp duty is 1,5 per thousand for the first €170.860,14 of the purchase price and 2 per thousand for the balance of the purchase price. The stamp duty should be paid within 30 days of the signing of the contract, otherwise there is an additional penalty charge.
On transfer of the title deed into the name of the Purchaser, the Purchaser must pay the transfer fees to the Land Registry Office.
Transfer fees rates are as follows:
Value of Property (Euros) Transfer Fees
- Up to €85.000 1,5%
- Between €85.000 - €170.000 2,5%
- Over €170.001 4%
For example if the value of the property is €205.000:
On the first €85.000 1,5% €1.275
Next €85.000 2,5% €2.125
Next balance 4% €1.400
However, if the purchase is made in joint names the effective value for calculations is halved.
For example if the value of the property is €205.000 then the amount is €102.500 for each person.
On the first €85.000 1,5% €1.275
Next €17.500 2,5% €437,50
So a couple such as this would pay the Land Registry Office the total amount of €3.425 transfer fees,
With new law, if on the purchase price of the property there is VAT, then the Purchaser will not pay any amount for transfer fees.
CAPITAL GAINS TAX
Capital gains tax is imposed on the gains accruing to any person from a disposal of immovable property. Capital gains tax is imposed at the rate of 20% on the gain.
The following allowances are given:
€17.086 Personal allowance (can be used only once)
€85.430,07 from the disposal of a dwelling house, provided that the house was the main residence of the taxpayer for a total period of not less than five years prior to the disposal.
There are also some other allowances i.e. the transfer fees paid, allowance from the inflation, the agents fees paid, etc.
Cyprus has double – taxation treaties with more than 60 Countries. The purpose of these treaties is the avoidance of double taxations of income earned in any of these countries.
The citizens of any of these countries can receive their income in Cyprus and they have the right to elect to pay the income tax in Cyprus at very favourable rates.
WILL & PROBATES
It is preferable to make a Will in Cyprus to cover movable and immovable property in Cyprus. The Will can be worked in such a way as to deal with Cyprus property only so as not to affect either property in other countries or any Wills already existing in other countries.
A will made in another country referring to Cyprus property may be valid in Cyprus, but it should be noted that on the death of the testator, the Grant of Probate must first be obtained in the country where the Will was made and then “resealed” in the Cyprus court, which inevitable leads to excessive delays and additional expenses.
There is no Inheritance Tax in Cyprus.
A new law has come into effect whereby the European Citizens can choose the law of their succession. For those who have already made a Will in Cyprus, it is advisable to do a Codicil whereby they can choose the law of their nationality as the law of their succession.
The above information has been compiled as a general set of guidelines only. Please don't hesitate to contact us for any further information and advice.