Investing in property whether at home or abroad is the most important decision of our life and can be very challenging. Allow Cyprian properties to help you to make the right property investment in Cyprus as smoothly and trouble free process. Investing in real estate in Cyprus is very simple and straight forward procedure.
Any individual or a Company can investment in Property/Land in Cyprus. According to the Law for any European citizens/companies there is no investment limit on real estate.
For Non-European citizens/companies the restriction to buy property is set to two properties (Apartment, villa). If land is purchased, the size is limited to 4011 square meters.
However, a Non-European citizen/Company may purchase in Cyprus unlimited properties or land only when they legally register and establish a Cyprus company according to the EU Law.
When deciding to invest in Real Estate in Cyprus the first most important concern is to use a reliable registered estate agent or a development company.
The second most important concern is to choose a lawyer/legal representative that will make sure that your investment is 100% safe.
The Lawyer will carry out a search at the Land registry office for the chosen property to verify that the property has Title deeds and is free from any financial burdens or memos.
Upon deciding to go ahead with the purchase whether will be Land, New property, Resale property or custom build property, your legal representative must do all necessary checks which includes a number of matters as follows:
- Title Deeds for the land
- Building Permissions in place
- Building Permits Issued from the Land Registry
- Passed Fire Safety Permit
- Division Certificate
- Final Certificates of Approval
- Road access in case of land purchase
- Water and electricity in case of Land Purchase for residential use
- Building density & – which building zone
- Vendor has title deeds of Land and clear from any burdens
- Sewage system in place (according to the local municipal sewage plan)
- Transferring Title deeds to the new owner.
FEES & TAXES
Before the contract is lodged in the Land Registry Office, it needs to be stamped by the Tax Office. Cyprus stamp duty is much less than many other EU countries. In Cyprus it is levied as follows:
- The first €5,000 – NIL
- €5,001-€170,000 – 0.15 % on the value or part thereof
- Over €170,001 – 0.20 % on the value or part thereof with a maximum limit of €20,000
These fees are only payable once upon Title deeds are ready to be issued to the new owner. The new charges (from 2011) are as follows:
- 1.5% On the €0 – €85,000 of the value of the property.
- 2.5% On the €85,001 – €170,000 of the value of the property.
- 4% On any amount above €170,001 of the value of the property.
The Cyprus government since December 2011 has abolished the transfer fees on all properties that they are subject to VAT and in addition has reduced to 50% the levy for properties that are not subject to VAT. The transfer fees abolishment/reduction is currently in force until further notice.
Most Lawyers charge legal fees between 1% and 1.5% on the purchase price plus VAT. Some may charge a set amount depending on the property purchase price.
The legal fees include the preparation of the power of attorneys and the contract of sale, stamping the contract of sale at the Tax Authority, Depositing the Contract of sale and the power of attorneys at the land registry, make the payments to the property seller on behalf of the client and receiving the receipts of payment, applying to the council of ministers for the permission to acquire immovable property in Cyprus, applying to the VAT Authority for 5% VAT instead of 19% VAT, Opening of bank accounts, setting up of electricity and water accounts and concluding a successful purchase.
Monthly and yearly living costs.
- Electricity bills are approx. €60 per month.
- Water bills are approx. €25- €40 per month, depending of usage
- Sewerage (SAPA) €120 per year depending on size of property
- Refuse tax is approx. €140 per year, depending on property and area.
- Immovable Property Tax; Tax is abolished since 1/1/2017
- District property tax €20 – €60 yearly – depending on property and area.
- Communal fees- approx. €50 – €150 per month (Depending of the size of the building and the facilities included).
- Property insurance approximately €220 per year.
- Basic Medical insurance between €40 – 60 per month.
Capital Gains Tax
Capital Gains Tax is levied at 20% on gains arising from the disposal of property by each individual person. The gain is reduced by an
indexation allowance that takes into account the inflationary increase over the years the property was owned. Non-residents are only
taxed when selling the property situated in Cyprus.
The following allowances are available to individuals:
The first €17,086 of gains arising from the first disposal of any property in Cyprus. The first €85,430 of gains arising from the
disposal of a house used by the owner for his/her own habitation. This allowance can only be claimed once. An individual claiming a
combination of the above allowances is only allowed for a maximum allowance of €85,430.
VAT on Real Estate:
For those buildings for which an application for a town planning permit was submitted prior to the 1.5.2004, no V.A.T. is charged in the event of an acquisition. For property acquisition today, a V.A.T. of 19% is charged, but only once. So if you acquire a property for which V.A.T has been paid previously you will not be required to pay V.A.T. again. V.A.T is not added on the sales price for the purposes of calculating the property transfer fees. For the 1st residency one can pay only 5% vat.
Cyprus Income Tax
Income tax is levied on world-wide income. Such income includes employment income (including benefits), profits from a business activity, rentals from immovable property and royalties, and pensions received (pensions from abroad may be taxed at the rate of 5% for amounts in excess of a designated amount, see below).
Various deductions are permitted, including some in respect of share ownership; and there are personal allowances. Married persons are
Non-residents of Cyprus are taxed in Cyprus on employment income (including benefits), in relation to services rendered in Cyprus, profits from a business activity which is carried out through a permanent establishment in Cyprus, rentals from immovable property situated in Cyprus, and pensions in respect of employment exercised in Cyprus, with the exception of pension paid from a fund established by the Government or local authority.
Chargeable income (after all allowances) is taxed (from 2008) as follows:
- up to €19,500 – nil
- from €19,501-28,000 – 20%
- from €28,001-36,300 – 25%
- above €36,300 – 30%
From the 2011 tax year, 35% income tax is payable on income over €60.000.
On the 1st January 2000, Law 74(1)/2000 came into force. This law abolished all obligation to pay Inheritance Tax regardless of the size of the estate.
The fact that there is no Inheritance Tax to pay under Cyprus Law is encouraging people to invest in the island.
Pension income tax is charged at 5% on amounts over €3.420 pa provided that the individual is neither Cypriot, nor has economic activity on the island.
(Important: The information given does not constitute a legal advice and are subject to change according to the laws of Cyprus/EU.)
For any further information or for any guidance for your property investment please send an email to firstname.lastname@example.org or Call +357 26 952 348 or send us an inquiry