Permission to Buy Property in Cyprus
Cypriots, EU citizens and companies with registered headquarters in the EU, do not require permission to buy properties in Cyprus. Non-EU citizens, non-EU registered companies and companies controlled by non-EU citizens, require a permission to buy property. The permission is merely a formality, especially if it is the first property of the purchaser. The application for permission is submitted at the local district or municipality office after the contract of sale is signed, usually by the agent or the legal advisor and it is approved by the Council of Ministers.
Reserving the Property
A reservation fee is usually paid as soon as an initial agreement is reached in order to stop further marketing of the property. The reservation amount is up to 5% of the value of the property and is withheld by the agent or any other legal advisor into a client’s account until a formal contract of sale is signed. The agent or legal advisor provides the buyer with confirmation of receipt of the amount which counts towards the agreed price.
Signing and Submitting the Contract of Sale
If the property is new and/or without a title deed, then a Contract of Sale between buyer and seller must be signed and submitted at the Department of Land and Surveys within 6 months of signing, in order to finalize the deal and secure ownership until the title deed is issued. Submitting the contract enables the purchaser to legally enforce the terms and register the property in his/her name. It is noted that if a property already has a title deed (i.e. used or completed), then it can be transferred straight away without a contract of sale, as described in part 4. If the property is complete at the date of the agreement, then the total amount is paid by the purchaser upon signing the contract. If the property is still under construction, then the parties usually agree upon a mode of payment based on the stage of the construction.
Stamp Duty
With the contract of sale being signed, the purchaser is liable for the payment of stamp duty based on the price of the property, for each value thereafter, as follows:
Price / Rate
€0 – €5.000 / 0%
€5.001 – €170.000 / 0.15%
€170.001 + / 0.20%
VAT on Property Purchase
Acquisition of a new build properties and development land is subjected to VAT at a standard rate of 19%. A reduced rate of 5% is applicable for properties purchased by all permanent residents of Cyprus, including EU and non-EU citizens, provided that the property will be used as their main residence for at least 10 years, they have not acquired any other residence in Cyprus with a reduced VAT rate, the property is up to 190sqm in area and the total purchase price does not exceed €475.000. The reduced rate applies for the first 130 sqm and for a maximum value of €350.000. Any area between 131sqm and 190sqm is charged at the standard rate. This VAT reduction does not apply to legal entities.
Issue and Transfer of Title Deed
Once a property is completed and inspected to have been constructed according to the relevant planning permissions, the planning authority issues the final building certificate which is submitted at the Department of Land and Surveys by the seller/developer and the Title Deed is issued within a couple of months. Once issued, the seller is obliged to transfer the Title Deed to the buyer as per the contract of sale. For the transfer both parties or their representatives, need to appear at the Department.
Payment of Transfer Fees
During transfer the buyer has to pay the transfer fees which are calculated on the market value of the property, for each value thereafter, as follows:
Market Value / Fees
€0 – €85.000 / 3%
€85.001 – €170.000 / 5%
€170.001 + / 8%
*The above fees are currently reduced by 50% as an official government incentive.
*Transfer fees not applicable when property is subject to VAT.
The market value of the property is estimated by the Department of Land and Surveys during the transfer and it may be higher that the declared price. In such case, the transfer fees are based on the new value.
For properties where VAT is applicable (i.e., new buildings and development land), no transfer fees are paid as they are exempt. In case the estimated market value is higher as mentioned above, then transfer fees are paid on the difference between the estimated market value and the declared price, based on the price bands above.