PROPERTY BUYING GUIDE

RE/MAX PROCEDURE FOR BUYING PROPERTY IN CYPRUS

Buying real estate in Cyprus is a straightforward procedure, briefly described in 6 steps below.

Property Consultation by RE/MAX

Our experienced Sales Associates are just a phone call away, ready to answer any of your questions and to arrange a convenient time to meet at any of the RE/MAX offices in Cyprus. The Sales Associate will discuss your requirements, show you plans and photos of various properties in order for you to chose the properties that fit your requirements and in order to arrange a viewing.

Viewing a Property

The RE/MAX Sales Associate will arrange for you to view the properties of your choice at a suitable time, pointing out all the aspects of the property and lifestyle in the specific area. It is clearly the client’s decision to make after listening to the pros and cons mentioned by our property consultants.

Reserving a property in Cyprus

Once you have decided on your dream property, an ‘Offer to Purchase’ agreement is prepared by RE/MAX with the amount you are offering for the property along with the payment terms. Upon acceptance and signing by the Seller, a reservation fee is paid by you to take the property off the market and secure it at its current price. At this moment, the Seller needs to supply you with a ‘Search Certificate’ from the Land Registry, showing all mortgages and encumbrances on the property, to start the preparation of the Sale / Purchase Agreement. In cases where you need to apply for a loan, a ‘Reservation Agreement’ is also signed before the Sale / Purchase Agreement, so that the Seller will wait for your loan approval. Afterwards, all details are collected for the preparation of the Sale / Purchase Agreement.

Purchase Contract

A draft copy of the contract of sale, along with the plans & specific details of the property will then be drawn up and forwarded to you for examination and comments. You may request advice from an independent property solicitor at this time. Once you are happy with the content of the contract, 3 complete sets will be prepared and an appointment with the property owners will be booked for signing.

Contract will consist of the following:

Core Contract
Architectural Drawings of the property
Technical specifications (if off plan)
Planning & Building Permits (if off plan)
Title Deed of the land, apartment or villa

From the date of signing the contract of sale, you have 30 days in which to pay the stamp duty and 60 days to deposit it at the Land Registry Office. For stamp duty charges please see Useful Information below.

Taking Delivery of your property

Once contracts are signed and property is paid in full, we will coordinate with you and the property owner on the time and date of delivery. At which time you will:

Inspect the property.
Any snags will be noted and specified in writing.
Details will be given to enable you to arrange for the transfer of utilities into your name, and to take out property insurance.

Foreign investors will need to make arrangements to travel to Cyprus to take delivery or appoint a legal representative to take possession on their behalf. You will need to come out to Cyprus for a minimum of 2-3 days to take delivery of your property.

Transfering the Title Deed

Once the Sale/ Purchase Agreement is signed, RE/MAX will coordinate all the paperwork that needs to be prepared for the Land Registry transfer. In order to arrange an appointment for the transfer, the seller needs to obtain clearances from the Municipality, Water Board, Sewerage Board, and Tax Department. In case there is a mortgage on the property, the seller will inform his bank to prepare all the paperwork to remove it at the time of the transfer at least 1 week beforehand. The bank will remove the mortgage upon receiving payment of the mortgage amount simultaneously with the transfer. You as the buyer need to issue Bankers’ Drafts that will be given at the Land Registry, at the time of the transfer. Also, you are responsible to pay for the transfer fees to transfer the title deed in your name.

PROPERTY FEES & TAXES

FEES

A. Stamp Duty

Stamp duty is payable to the Director of Inland Revenue upon stamping the purchase agreement. Stamp Duty Charges are:

The first € 5,000 Nil

Value from € 5,000 up to €170,000 0,15%

€170,000 and above 0,20%

Example:

Purchase Price: €400.000

€5.000

€170.000

0,15%

€255

remaining

€225.000

0,20%

€450

TOTAL Stamp Duty payable

€705

B. Transfer Fees

Upon transfer of the property and registration in the purchaser’s name, the district Land Registry Office will charge transfer fees, which are based on the market value of the property at the time of the purchase and are calculated as follows:
Value up to €85,000                                                                3%
€85,001 - €170,000                                                                 5%
€170,001 and above                                                               8% Transfer fees are charged accumulatively and are payable at the time of issue of title deeds (usually it is 3 – 5 years after final delivery of property). There are benefits for properties that have dual ownership, as the value of the property can be split between the owners and transfer fees will charged on the 50% of the property value for each.

C. VAT Payable on Property

Since Cyprus accession to the E.U., VAT is applicable on property purchases, however, in cases where an application for a town permit was filed before the 1st of May 2004, VAT is not charged.

For projects where the town planning application has been filed after the 1st of May 2004, VAT will apply on the sales price.

VAT is charged at a rate of 19%. For first time buyers where the property purchased will be their permanent residence, then 14% of the VAT paid can be claimed back. A permanent resident of Cyprus is one who lives at least 183 days in Cyprus.

D. Communal Expenses

When it comes to managed properties, a service charge is applicable for the maintenance and upkeep of the common areas of the premises in good condition. The service charge is usually on a m2 basis, and can range from €50 – 150 per 2 months.

TAXES

A. Capital Gains Tax

Should the purchaser decide to sell the property at a later date, Cyprus Law allows the full amount paid for it in foreign exchange to be transferred abroad at the time of resale. The equivalent of the full purchase price and any increase in the value of the property may be transferred immediately. One of our Sales Consultants can advice you on any tax exemptions and calculate any Capital Gains Taxes arising from the purchase or sale of a property.

B. Immovable Property Tax:

The registered owner of a property purchased in Cyprus is liable for an annual immovable property tax calculated on the market value of the property as at 1st of January 1980.

Property Value at 01.01.1980	Property Tax Rates
Up to €170,860	Nil
€170,860 - €427,150	0.25%
€427,150 - €854,300	0.35%
Over € 854,300	0.4%

IMPORTANT: Immovable property tax is based upon the value of the property in 1980 which is much lower than the current market value.

C. Other Property Taxes:

There are property taxes paid to the Municipality, dependant on the size and value of the property. This covers refuse collection, sewerage, street lighting, etc. and it varies according to the area, from €50 – €250 per annum per unit property.

D. Inheritance Tax

There is no inheritance tax in Cyprus.

E. Tax Benefits

Corporation tax in Cyprus is currently at 12,5%. There are various Tax Advantages, especially attractive to those looking to invest in Cyprus or foreign citizens retiring to Cyprus. It is always best to discuss these with your auditors and legal consultants.