Buying Property in Cyprus 2021

Buying Property in Cyprus: Everything you Need to Know in a Nutshell

Although Cyprus offers endless opportunities to invest, buying a property in Cyprus requires careful planning and preparation. This ultimate guide covers everything you need to know about the Cyprus property market 2021.

What will you find in this article

Can foreigners buy property in Cyprus?

EU citizens are entitled to acquire property in Cyprus without any restrictions. Non-EU citizens who do not permanently reside in Cyprus may only purchase one apartment, house, or land after having received the approval of the Council of Ministers, with the property size not exceeding 4,014 square meters.

How does property acquisition work in Cyprus?

Property acquisition refers to the process of gaining ownership or rights over a real estate property. The rules of acquiring any property may vary from country to country. Below, we share the most common procedure when it comes to buying a property in Cyprus. 

Involvement of a Real Estate Agent

People looking to acquire real estate in Cyprus often involve a real estate agent to obtain a larger pool of properties. However, such a step is not mandatory and only depends on personal desires. 

Real Estate Agents in Cyprus are regulated as per Real Estate Agent Law N71(I).2010 and must be licensed. The fee of a real estate agent is typically evenly split between the Vendor and Purchaser and ranges between 2-5% of the property’s purchase price. 

The role of a lawyer in a real estate transaction

Acquisition of a property is a considerable investment for any individual or entity involving the transaction of a large amount of money, numerous documents, and lengthy legal conveyancing process. Lawyers are competent and conversant with the local laws, potential legal issues, and tricky classical practices. Therefore, engaging with a local lawyer when buying a property in Cyprus can help you minimize any potential risks and ensure a smooth real estate transaction. 

Real estate is an essential asset of most businesses and individuals. However, its ownership brings with it potential risks and liabilities. It is for these reasons that real estate due diligence forms a crucial part of any property acquisition.

Typically, one of the first things a Cyprus lawyer would inspect is the title deed of the sought property from within the records of the Department of Lands and Surveys (“DLS“). Before entering into a transaction, it is imperative to verify that the Vendor is the rightful owner of the property as well as to ensure that no encumbrances such as easements, mortgages, caveats or leases, are registered on the title, as that could subsequently hinder the successful completion of the transaction.

Once the due diligence on the property has been completed, the lawyer will assist in negotiating the real estate deals and draft the contract for the purchase of land. The agreement must be stamped and filed at the DLS within two months from the date of its signing. Failure to do so makes the Purchaser ineligible from exploiting the rights and safeguards granted by the Specific Performance Law.

The role of a lawyer in a real estate transaction

How to transfer the title onto the Purchaser’s name?

If a title for the sought property exists, then the transfer onto the Purchaser’s name can take place imminently and upon full settlement of the purchase price. An additional proviso for the transfer is that the Vendor has settled all fees, charges, and taxes that burden the immovable property. Such fees, charges, and taxes may be one or more of the following: 

  1. Immovable property tax
  2. Urban immovable property tax
  3. Capital gains tax
  4. Inheritance tax (if applicable). 

Also, a certificate of payment of liabilities must be issued by the Sewage Board, Municipal fees and Community fees.

When it comes to new developments in Cyprus, issuing a title may take some time because a developer must complete specific steps before, during, and after the project is completed. In such cases, the Purchaser may occupy the property before the transfer of the title. 

What is specific performance in property law?

Specific Performance Law safeguards a Purchaser if the Purchaser is not allowed to immediately transfer the acquired property onto his/her name even though payment of the consideration has been effected.

According to the provisions of Specific Performance Law, the Purchaser of immovable property may enforce the specific performance of the terms of the contract and secure the transfer of the acquired property onto his/her name, as long as a duly signed and stamped copy of the contract has been deposited at the DLS, within two (2) months from the date of signing of the contract. 

By depositing the contract in the DLS, the Purchaser prevents the Vendor from transferring the property elsewhere as long as the contract is valid and legally effective. It should also be noted that no burdens, charges or encumbrances can affect the right of specific performance after the contract has been deposited with the Land Registry.

Limassol District Cyprus
Limassol District, Cyprus

How easy is it to get financing in Cyprus?

Mortgages are widely available across the island regarding the financing of immovable property acquisition. As a rule of thumb, up to 70% of the property’s value to be purchased may be financed.

While assessing the financing application in a process called “know your customer (KYC),” the bank will look into the Purchaser’s identity, the origin of the funds used to purchase the property, and the kinds of transactions in which the customer is likely to engage in, in the future. This process enables financial institutions to identify unusual or suspicious behavior, termed anomalies, which may indicate money laundering.

What costs are involved in buying property in Cyprus?

Transfer Fees

The total amount of tax depends on the value of the acquired property and is typically paid by the Purchaser. The Transfer Fee is calculated as follows: 

  • Up to €85,000 of the property value – 3%
  • From €85,001 to €170,000 of the property value – 5%
  • From €170,001 of the property value – 8%

Stamp Duty

Unless otherwise stipulated in the contract, the Purchaser is liable for the payment of stamp duty as follows:

  • Up to €5,000: 0%
  • From €5,001 – €170,000: 0.15%
  • Over €170,000: 0.2%

Although the absence of the revenue stamp on a contract does not render it void, the revenue stamp must be paid before depositing the contract to the Land Registry for Specific Performance purposes (see above). The stamp duty plus a fine will be payable when the document is produced to the Land Office to transfer ownership of the property to any Government department or the court.

Immovable Property Tax

There is no immovable property tax. The tax was abolished 1st of January 2017.

Immovable Property (Towns) Tax

The registered owner of immovable property is also subject to minor taxation under other laws, such as municipal or village regulations. These taxes are calculated according to the property’s size and the area it is located, covering sewerage, refuse collection, and street lights. The charges range in total from €80 to €170 per annum.

Capital Gains Tax

Capital Gains Tax is levied at the rate of 20% on profits arising from the disposal of immovable property or profits arising from the disposal of shares of a company, the assets of which consist mainly of immovable property.

Estate Duty

There is no inheritance tax in Cyprus as the Estate Duty. Estate duty was abolished on 1st January 2000.

Buying Property in Ayia Napa
So White Club Resort, Ayia Napa - Cyprus

What are the best places to buy property in Cyprus?

As per the DLS, in terms of regional distribution of the total CoS during 2019, the majority of the sales were in Limassol (33,9%), followed by Paphos (25,4%), Nicosia (19,3%), Larnaca (15,1%) and Famagusta (6,3%).

Depending on your lifestyle and personal real estate goals, there are attractive properties to be found in locations all over the island.

  • Paphos (Greek: Πάφος) is located on the southwest coast of the island of Cyprus, and sheltered from the north by the majestic Troodos Mountains. It has a local international airport, which is convenient for frequent travel.
  • Famagusta (Greek: Αμμόχωστος) lies on the island’s east coast in a bay between Cape Greco and Eloea and is about 37 miles (55 km) east of Nicosia. One of the most popular summer resorts Ayia Napa is located in this area.
  • Nicosia (Greek: Λευκωσία), the capital of the Republic of Cyprus lies along the Pedieos River, in the center of the Mesaoria Plain between the Kyrenia Mountains (north) and the Troodos range (south).
  • Larnaca (Greek: Λάρνακα) is home to a major international airport, which makes getting there easy. Like other Cypriot coastal towns, Modern Larnaca is divided into an older city center and a wide sprawl of hotels and restaurants along the beach.
  • Limassol (Greek: Λεμεσός) is the second-largest urban area in Cyprus and has been ranked by TripAdvisor as the 3rd up-and-coming destination in the world.

Disclaimer: The above is intended to provide a brief guide only. It is therefore essential that appropriate professional advice is obtained. N.V. Panayiotou Legal LLC is happy to assist you in this respect.

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