Holiday
and Investment Properties In Cyprus
The Buying Process
In Cyprus the purchase of a property by a non-cypriot requires
the approval of the council of ministers under the immovable
property acquisition (aliens) law. The approval is in most
cases, a formality provided the buyer(s) can prove the financial
means to support themselves in Cyprus (i.e. Proof of annual
income in excess of £12,000) and do not have a criminal
record in either their country of origin or Cyprus. Cypriots,
or persons of Cypriot origin, are allowed to purchase property
without restrictions but non-Cypriots are restricted to buying
one apartment, house or building plot not to exceed 4013 m2.
Permission for larger property must be sought from the council
of ministers. This may be considered favourably in the case
of an area where the Government wishes to promote tourism
for instance.
An initial contract of sale is drawn up confirming
the name and address of seller & purchaser and property
details including the agreed sale price. An application of
transfer is then made to the district lands office where the
value of the property will be reviewed for the purpose of
calculating the transfer fees payable by a valuer. Please
note at this stage a valuer may not accept the purchase value
indicated in the sales contract. Transfer of ownership will
be registered at the land registry as soon as the title deed
is issued by the relevant Government authority and the account
has been settled.
To ensure that the property meets the
restrictions placed on non-Cypriot buyers, it is essential
to employ a lawyer to protect your own interests.
Legal issues & Costs related to buying property
in Cyprus
BUYING PROPERTY IN CYPRUS - Compared to many
countries, the logistics of property purchase in Cyprus by
foreigners are relatively simple & easy.
ACQUIRING THE TITLE DEED - Transfer of ownership
from vendor to purchaser is accomplished by a simple procedure
through the Cyprus Land Registry Office, either by the buyer
in person or by appointed third party with a Power of Attorney.
TAXES & FEES - The transfer of title can be effected
once the Council of Ministers' permission is obtained and
the Central Bank of Cyprus confirms receipt of the foreign
funds. Upon transfer of the property and registration in the
purchaser’s name, the District Land Registry Office
will charge Transfer Fees, which are based on the market value
of the property at the time of purchase, and are calculated
as follows:
| Value up to |
- CY£ 50.000 |
3% |
| CY£50.001 |
- CY£100.000 |
5% |
| CY£100.001 |
- and over |
8% |
IMMOVABLE PROPERTY TAX, SERVICES TAX
- The annual immovable property ownership tax imposed
by the Government is approximately CY£60 - 120 per year,
depending on the value of the property.
CAPITAL GAINS TAX - Property
sales in Cyprus are subject to Capital Gains Tax at the rate
of 20% on the gain, however the first CY£10,000 are
tax-exempt.
INHERITANCE TAX - Inheritance
tax is not imposed.
LEGAL SAFEGUARDS FOR FOREIGN INVESTORS
- Contrary to the risks inherent in the purchase
of property in some countries, Cyprus has never been involved
in the nationalization of any sector of the economy, nor in
the expropriation of property owned by foreigners.
TAX PRIVILEGES - Personal
effects, household goods, furniture & cars can be imported
duty free by immigrant retirees.
FINANCING FACILITIES - Vollenveida Ltd. offers
various long term payment schemes to assist its purchasers.
In addition Vollenveida Ltd. may assist you to obtain from
a Commercial Bank in Cyprus a housing loan at favorable conditions.
Cyprus Mortgages and
how they work
All mortgages are full status and proof of
income and outgoings will be required. Cypriot mortgages can
be arranged for acquisition & construction purposes. A
deposit of a minimum 20% of the purchase price is generally
required and you will also be liable for solicitor's fees.
Cypriot mortgages are repayment loans and the maximum term
available is between 10 - 30 years. All mortgages should be
fully repaid by the age of 65 and life cover is required by
the lenders. A medical checkup is required for all applicants
aged over 40 years.
Cypriot lenders assess eligibility for a mortgage
on the applicant's ability to service the loan and not potential
rental income from the property. The general guideline is
as follows: of an applicant's net income 33% should cover
existing outgoings and the monthly repayment on the overseas
mortgage. If you are self-employed income is assessed as the
average of the last three years' net income. A percentage
of rental & investment income may also be considered.
If employed a lender will base your income on your payslips
and the amount that is credited to your account monthly.
Outgoings considered are liabilities such
as current mortgage/rent, personal loans & maintenance
commitment.
For example - applicant x has a net monthly income of £2000
with a uk mortgage of £500 and no other outgoings. Taking
into account 33% of the income, that is £660, a borrowing
with a monthly repayment of £160 could be considered.
The mortgage is secured on the cypriot property.
A valuation will be carried out by the lender and the cost
is covered by the arrangement fee payable to the lender on
receipt of a loan offer. The arrangement fee is approx. 1%
of the loan amount.
Taxes & Other Costs
Transfer fees - payable by
the buyer(s) when the property is registered in their name
at the district lands office. As a guideline the following
graduated fees apply:
Value of property
c£
<£50,000
£50,001 - £100,000
£100,000<
Value of property c£
<£100,000
£100,001 - £250,000
£250,001 - £500,000
£500,000< |
Transfer fee on
property value
3%
5%
8%
Annual tax c£ per thousand
0%
2%
3%
3.5% |
Stamp Duty - The buyer is liable
for the payment of stamp duty at the rate of c£1.50 per
£1,000 if the property value is £100,000 or less.
If the property value exceeds £100,000 the rate of c£2
per £1,000 applies.
Estate Duty - Estate duty was abolished
in january 2000.
Property Taxes - Local authority taxes (rates
equivalent) are payable annually approx. C£50 - £150.
Capital Gains Tax - Capital gains tax is
levied at the rate of 20%.
Questions & Answers
How much can I borrow ?
Complete our quotation request and we will send you a personalised
quote confirming the maximum amounts for which you can be
considered over the terms available. The information we provide
is based on current rates and lending practices of the major
lenders in Cyprus.
How long does the process take ?
Once the bank receives a completed application form with all
the requested supporting documents a decision for a mortgage
will usually take approximately 2 weeks. However, the application
to the council of ministers may take up to three months. If
non-resident a further application should be submitted to
the exchange control officer to confirm that the purchase
was effected in foreign exchange and this may also add considerable
time to the process.
Supporting documents required for an application
APPLICANT DETAILS
- Photocopy of passport
- Photocopy of birth & marriage certificate(s)
- Proof of residence in the UK i.e. Driving
licence or Council Tax
- Six months' personal bank statements illustrating
income & outgoings declared
CONFIRMATION OF INCOME
If Employed
- Confirmation of employment i.e. contract
or reference from your employer(s) stating income, your
position and start date of employment
- Three most recent pay slips and last 2
P60s
If Self-Employed
- Last three years' audited accounts
- A letter from a chartered accountant confirming
the figures and personal drawings
- Last two years' tax returns
Other sources of income
- Last two years' tax returns
- Copy of tenancy agreement if rental revenue
to be included
- Annual statement of pension or retirement
payment details
CONFIRMATION OF OUTGOINGS
- Most recent annual mortgage statement and
written up-to-date proof of the current monthly repayment
- Copy of tenancy agreement if renting currently
- Copy of any loan agreement(s) in place
- Copy of most recent credit card statement
- Copy of Decree Nisi or any such documents
confirming maintenance commitment
PROPERTY DETAILS
- Copy of the Sales Contract
- The registration certificate of the property
- Copy of council of ministers' approval
to acquire property
- Application to the district land office
- Developer's plans for construction
ADDITIONAL REQUIREMENTS
- Copy of council of ministers' approval
to acquire property
- Proof of personal contribution to the
purchase
- Remittance of £100
We look forward to hearing from you and
trust that in the meantime you will not hesitate to contact
us should you have any further queries.
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