BUYING PROPERTY
Cypriots or persons of Cypriot origin are allowed to purchase immovable property without any restrictions. Under the Immovable Property Acquisition Law foreign nationals, companies and trusts may acquire freehold immovable property in Cyprus subject to prior permission from the Council of Ministers.
Non-Cypriot citizens are permitted to acquire:
A. an Apartment
B. a House*
C. A piece of Land on which to build a House** with restrictions(not exceeding 3 donums = 4014sq.m)
These restrictions on the acquisition of property were lifted for EU-citizens from 2009.
Permission to buy property must be sought from the Council of Ministers by a written application from the foreign buyer, after the contract of sale is completed and signed.
The application to the Council of Ministers to acquire immovable property in Cyprus can be made within a reasonable time after signing the contract of sale. It is advisable that contracts of sale be deposited at the relevant District Lands office with-in two months after the signing of the contract in order for the purchaser to have the right asking from court “Specific Performance”. Ownership in Cyprus is denoted by title deeds, issued by the District Land Office.
The prospective buyer needs to apply for the consent of the District Administration Office (form 145) as well as a permit from the Central Bank of Cyprus, concerning the transfer of funds.
Transfer of ownership from Vendor to Purchaser is accomplished by a simple procedure through the Cyprus Land Registry either by the purchaser or by a third party with the power of attorney.
Evidence of payment for the property with Foreign Exchange must be provided as a prerequisite for the registration.
TRANSFER FEES
Transfer fees are paid to the District Land Office by the purchaser on the sale price upon transfer of the property with the following scale:
VALUE OFPROPERTY €, EURO
TRANSFER FEES
Up to €85,000 – 3.0%
From €85,001 – €170,000 – 5.0%
From €170,001 > 8.0%
STAMP DUTY (as from 1st March 2013)
The purchaser has to pay Stamp Duty prior to the deposit of the contract at the District Lands Office. Payment is due within 30days of signing the sale agreement and is based on the following table. The amount is payable to the Tax Authorities.
VALUE OF PROPERTY
Up to 5000 – €0
€5,000- €170,860 – €1,5 per thousand
€170,861 > – €2,0 per thousand
The maximum charge is €20,000
SELLING OF PROPERTY
Purchased property by a foreigner can be sold at any time in the future and the sales proceeds can be remitted overseas.
The equivalent of the full purchased price can be remitted immediately while the remaining balance from the sale can be remitted at the rate of €17,086 per year, starting from the year after sale.
CAPITAL GAINS TAX
Capital gains tax is paid on gains arising from the sale of immovable property. Tax due is 20% on gains realized and is calculated as follows. Proceeds from the sale less cost of Property, professional and legal fees, commission paid, interest paid, inflation allowance and investment allowance of €17,086 on disposal of any property and €85,430 on disposal of residence provided that it has been used by the seller as a residence for at least five years prior to the sale.
These allowances are granted only once to each individual, unless they have not been exhausted at the first sale, in which case any balance will be carried forward. The investment allowance is granted to each owner of the property. Example: If the property is owned by husband and wife then the total investment allowance is €34,172.
The following categories of dispositions are exempted from Capital Gains Tax:
a. Donations between relatives up to 3rd degree of kindred.
b. Donations to Limited Companies, all the shareholders of which are members, and constitute for 5 years after the donation to be members, of the family of the donor.
c. Donations from family companies to their shareholders, but only in cases where the property gifted was originally acquired by the company also by way of gift.
d. Donations to Charitable Institutions or to the Republic of Cyprus.
e. Exchanges of permanent residence.
f. Compulsory acquisitions.
g. Transfers by reason of death.
Example:
CAPITALGAIN TAX:
Euro, €
Proceeds from Sale: 307,548
Cost of Acquisition: (-170,860)
Inflation allowance(170,860 x 55.5%) = (-94,827)
Gains from Property: 41,860
Less Investment allowance * (17,860)
TAXABLE Gain on Sale of Property: 24,000
Capital Gains Tax Due: (24,000×20%) = 4,800
- According to the case
VALUE ADDED TAX
Current V.A.T rate applies on all new constructions with building permits approved on 1st May 2004 and onwards.