VITAL
INFORMATION PRIOR TO THE PURCHASE OF A PROPERTY IN CYPRUS
Topics
Legal System
The legal system in Cyprus is mainly based
on the British as well as the Greek legal system. Most laws are
translated into English. In addition, the Land Registry is also
based on the British one, which is probably one of the most reliable
and advanced system in the world.
Legal fees are much more reasonable than other European countries.
Banking Standard
The banking system in Cyprus is close to British
system. They are all well organized and well equipped with the latest
technology.
Non-Cypriots have the privilege to open foreign currency and local
deposits without difficulty.
Cyprus banks offer flexible housing loans in foreign currency to
suit a client's needs.
Purchasing Immovable
Prior to purchasing immovable property in
Cyprus, the prospective purchaser must be aware of basic principles
governing the Law of Contract and transfer of property in Cyprus.
EU & non EU Nationals not residing in Cyprus can buy and acquire
the Title Deed only one property on the island, (house or flat-this
does not refer to land). However restriction only applies to EU
Nationals if they do not have a valid residence permit in Cyprus.
If they do have a residence permit then they may purchase as many
properties as they want. To purchase a property in Cyprus they need
the approval of the Council of Ministers-which is a mere formality.
For EU Nationals, there is no restriction on the number of pieces
of land they intent to buy irrespective of size or their residence
status.
The Cyprus government states that for an acquisition of immovable
property by foreigners the following documents must be submitted
for the consideration of the application:
1.
Survey plan
2. Copy of the title of ownership
3. Copy of the building permit for the erection of the house/block
of flats or for the residential development of estates. If separate
titles of ownership have been issued for the flats of the block
or if the house is mentioned on the title of ownership, applicants
need not submit a copy of the building permit. For plots under
division, applicants must submit a copy of the division permit.
4. Copy of the deed of sale.
5. Sectional view of the building or the flat. Very old houses
mentioned on the title of ownership are exempted. A division plan
must be submitted in the case of division of plots. In areas of
residential development, the plan must be submitted showing the
position of the house on the entire holding.
6. Area in square metres of the plot which is to be acquired.
7. Documents proving the financial situation of the applicants.
8. Copies of the pages of the applicants' passports and those
of their spouses (the pages containing the data and the photo
of the holders and stamps of arrival to and departure from Cyprus).
9. Certificate of marriage of the applicants or relevant attestation
of their Embassy and in cases where the spouses do not have the
same surname and when the name of the husband is not written on
the wife's passport.
10. Copy of residence permit and work permit of the applicants
in Cyprus.
11. Application COMM 145, completed clearly and in full.
12. If the applicant is a company or a shareholder in an offshore
company, it is necessary to submit the certificates of registration,
of shareholders and of the registered offices of the Company.
13. If the applicant is a Company, a copy of the company's Articles
of Association must be submitted and written information must
be furnished on the company's activities in Cyprus and the staff
it employs, both Cypriots and foreigners with the social insurance
numbers.
Residential
Permit
Residential permit is easily obtained for people living in Cyprus
and who have purchased a property in Cyprus The applicant needs
to submit an application and give evidence of secure annual income
that supports him and his family. In addition, the applicant must
submit:
a)
A copy of the sale or rental agreements
b) Copies of pension or retirement income
c) Any other relevant income documents
d) Passport and three photos
The above application and documents may be submitted to the local
immigration office in the area of residence
Title
Deeds
Title deeds are issued by the Land Registry
Office, which is the only competent government department to register
charge and transfer immovable property.
Examination of the Title Deeds or Certificate of Registration of
the Immovable Property is essential.
By examining the registration certificate we ascertain the following:
A)
Identity of the property in other words the Title Number and the
location of the property.
B) Owner of the immovable property
The owner of the immovable property may be a person or persons
or a company or companies.
C) Charges
An immovable property may be burdened with the following charges:
Mortgage, Interim Order, Memo, Deposition of the Contract of Sale
to the Land Registry Office
D) Right
Any rights related to the immovable property such as access fees
etc are mentioned on the title.
Contract
of sale
A)
Drafting the contract of sale
The Contract of Sale is usually drafted by an advocate who may be
acting for both parties (Vendor and Purchaser).
B) Deposition of the agreement to the lands office.
It may be done in person and/or by the advocate of the Purchasers.
Transfer
of property from the vendor to the purchaser
A)
PERMISSION OF THE COUNCIL OF MINISTERS
A permission granted by a committee (district officer) under the
instructions of the Council of Ministers is needed in order to
transfer immovable property to aliens (non-EC residents).
For acquiring such permission, an application, must be accompanied
by the documents mentioned below:
a)
A site plan
b) A copy of the property title
c) A copy of the building permission
d) A copy of the contract of sale
e) A plan view of the house or apartment
f) The area of the immovable property to be acquired
g) A bank reference and a bank statement of the applicants
h) Copies of the pages of the passports of the applicants and
of their spouses
i) The marriage certificate of the applicants or a relevant
certification of their embassy, where the spouses do not have
the same surname and where the name of the husband is not mentioned
on the passport of the wife.
j) A copy of the residence and work permit of the applicants
in Cyprus EC citizens who are residents of Cyprus do not need
the permission of the Council Of Ministers. They only need to
prove that they are residents in Cyprus.
k) Registration number from the Immigration Office (pink slip)
l) Application to the District Office
B) TRANSFER
The transfer in the name of the purchaser is affected either in
person or through a representative, by means of a Power of Attorney
certified by a certifying officer. The following is needed for
transfer:
a)
Free property title
b) Stamped Contract of Sale
c) fumish of receipts of payment of all fees, charges and taxes
burdened on the immovable property being transferred. Such fees,
charges and taxes may be one or more of the following: (i) Immovable
property tax, (ii) Urban immovable property tax, (iii) Capital
gains tax, (iv) Inheritance tax (if applicable).
d) Certificate of payment of liabilities issued by the Sewage
Board
e) Municipal fees
f) Community fees
g) Land Registry fees
The
procedure of acceptance of the transfer is concluded by the calculation
of the registration fees from the Land
Registry Officers and their payment by the Purchaser to the Land
Registry Office.
The level of fees depends on the type of transfer and it is either
calculated on the estimated value or on the purchase value of
the immovable property.
Estimated value means the value of the immovable property as it
has been registered in the records of the Land Registry Office.
If the purchaser has taken a bank loan or a loan from another
organization, the transfer and mortgage in benefit of the creditor,
take place simultaneously.
The Land Registry Office issues a new property title under the
name of the purchaser and forwards it to the purchaser, following
the transfer.
Fees
and tax payable
(a)Transfer
fees, payable to the Land Registry Office upon the transfer
of the property to the purchasers The transfer fees depend on the
purchase price as it is equally divided to each purchaser.
(i)
For purchase price up to CY£50000 (Fifty Thousand Cyprus
Pounds) for each purchaser the fees payable will be equivalent
3% of the purchase price.
(ii) For purchase price over CY£50000 up to CY£100000
for each purchaser the fees payable will be equivalent 5% of the
purchase price.
(iii) For purchase price over CY£100000 for each purchaser
the fees payable will be equivalent 8% of the purchase price.
(b)
Immovable Property tax (per annum)
(i)
Up to CY£100000 (One Hundred Thousand Cyprus Pounds) there
will be no fees payable.
(ii) From CY£100001 and up to CY£250000 the fees payable
will be equivalent 2/1000.
(iii) From CY£250001 and up to CY£500000 the fees
payable will be equivalent 3/1000.
(iv) Over CY£500000 the fees payable will be equivalent
3.5/1000.
(c)
Capital Gains
Subject to numerous exemptions and indexation, a 20% charge is levied
on the profit. A £50.000 tax-free allowance is made for own
house provided that is your residence for five years and £10.000
for other property.
(d)
Stamp duty for Contracts
(i)
For purchase price up to CY£100000 (One Hundred Thousand
Cyprus Pounds) the stamp duty payable will be equivalent to 1.5/1000
of the purchase price.
(ii) For purchase price over CY£100000 (One Hundred Thousand
Cyprus Pounds) the stamp duty payable will be equivalent to 2/1000
of the purchase price.
Appointing
a solicitor
You
are free to use a solicitor of your choice or we can recommend one
of the local area
Applying for a Mortgage
The
local banks in Cyprus offer a variety of loans either in Cy£
or foreign currency. The normal charge is the basic +2%. In the
case of a mortgage, then there are mortgage fees involved, which
are calculated at 1% on the mortgage amount.
Inheritance tax
No
Inheritance Tax paid under Cyprus Law and this encouraging people
to invest into the Island.
Capital Gains Tax (CGT)
The
first CY10,000.00 (per person) is exempt. In calculating any CGT
liability the following are deductible allowances
a.
Inflation
b. Estate Agents fees (provided the agent is registered).
c. Improvements and fixtures and fittings-provided these can be
established by of receipts. Capital Gains tax is then charged
on the balance at the rate 20%. This allowance is a once in a
lifetime allowance! However any unused allowance may be varied
forward. If, however, the property sold has been the main home
of the Vendor at least five years, then a CGT relief/allowance
of CY50,000.00 can be claimed.
VAT
The
rate of V.A.T. in Cyprus is currently 15% V.A.T. on new property
as it is charged as from 1st May 2004, at the rate of 5% for a property
that is the principle place of residence, and 15% for secondary
properties. For projects, V.A.T. is payable on the selling price
of the property and land and building cannot be split. No V.A.T.
is payable cases where an application for a Planning permit was
submitted before 1st May 2004.
Tax
advantage
Cyprus
is one of the lowest taxed countries in the World and the least
taxed amongst the EU members.
For all Cypriot tax residents their total annual income up to 10,000CYP
is tax exempt.
In addition Cyprus has double taxation treaties with many countries,
so that its residents don't pay tax in both countries. Cyprus has
signed 26 such treaties, regulating in effect tax relations with
over 40 countries.
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