HOW TO BUY A PROPERTY IN CYPRUS?
• After you have chosen a property, you will have to pay a deposit of between £1,000 and £2,000 as a sign of a legally binding purchase agreement. However, common sense dictates that you should never sign a document without first getting it looked at by independent legal expert. Many lawyers, dealing with with overseas purchasers have a 24-hours fax back service so they can check anything you might need to sign before you do so, even if you are in Cyprus at the time.
• The second phase is when contracts are drawn up. At this point the conditions of the agreement are considered and you will have to pay further deposit of between 10 and 30 % (10% is usually paid for a resale property, and between 20 and 30% for a new-build).
The contract itself should include: the full name of the party/parties buying the property; A full description of the property including any rights you have to the communal areas; If you are buying off-plan, the contract should include a clause starting that your money will be returned in the event of the builder going bust and not completing your property; Details of the title deeds, your lawyer should run special checks to ensure the person selling the property to you is, in fact, legally entitled to sell it; Any special conditions; Details of any licences or planning permissions needed;
• Then comes a rather formal action – the contract is sent to the land registry and the buyer should send a written application to the Council of Ministers in Cyprus for approval to transfer ownership of the property into his name. The buyer is free to settle in the property while waiting for the approval. Buyers need to present bank and character references with the application.
• The rest of the money is generally paid on completion for resales and in terms agreed by the developer for new-builds
• When the approval is received, all taxes are due to payment.
FEES AND TAXES
• Be advised that the annual property taxes in Cyprus vary as much as up to 3,5 % of the value of the property price.
• Keep in mind that the legal fees in Cyprus are between 1 and 2 %. The property agents normal fee is about 5 %, but usually they charge you between 3 and 10 %.
• Transfer tax in Cyprus stands between 3 and 8% and there is an additional stamp duty payable of up to 0.2% of the property's price
• The notary fee is around ˆ 2, 030
Capital gains tax - this is the tax you pay when you come to sell your property. This is currently levied at 20% but if you are selling for the first time each person of the contract is entitled to 10,000 cyprus pounds free of tax.
Inheritance tax - There is no inheritance tax in Cyprus. For UK buyers: make sure you won't be charged UK inheritance taxes on the property. A tax advisor will be able to let you know the best way to avoid UK inheritance tax.
Income tax - Income tax rates in Cyprus are low and tax is normally deducted from source. If you receive your pension in Cyprus, a flat rate of just 5% is taxed (the first 2000 cyprus pounds is free); Worldwide bank interest and dividents are also taxable at between 10%-15%.
