Buying real estate in Cyprus is a simple process, but it still requires thorough research. It is necessary to review offers available on the market in advance, and, if possible, get a specialist to help you, guiding you and ensuring the safety of buying an apartment in Cyprus.
In this article, we will explain what the procedure for buying real estate in Cyprus is and go through the key steps towards a successful transaction.
Content:
- How to buy property in Cyprus for foreigners
- Stages of real estate registration procedure in Cyprus
- Finding a lawyer or agent
- Creating a bank account
- Reserving a property
- Signing a contract
- Making payment
- Reduced VAT
- Obtaining a title deed
- Real estate taxes in Cyprus
- How to conduct a remote purchase of real estate
- We will help you become a real estate owner in Cyprus!
How to buy property in Cyprus for foreigners
If you are interested in relocating or scaling up your business in a new country, a good option would be buying real estate in Cyprus. The pros and cons of doing business here are the first thing to weigh before entering the local market. Cyprus provides high living standards, while being cost-effective for doing business. The island’s mild Mediterranean climate and strategic location make this country an ideal place for buying a home.
The returns of property in Cyprus are among the highest in Europe, and the wide variety of options available can satisfy the needs of even the most discerning buyer. Here you can buy everything from commercial real estate to luxury penthouses on the coast.
Taxes in Cyprus for non-residents are lower than for locals. Foreign nationals pay taxes on income derived from sources within the island, while Cypriots are taxed on income received from organisations inside and outside the country.
Who can become the owner?
Before we delve into how to buy a home in Cyprus, you need to be aware that the island is divided into two states: the Republic of Cyprus and the Turkish Republic of Northern Cyprus. The latter is recognized only by Turkey and has its own ins and outs of the purchase and sale process. In this article, we are talking only about the Greek portion of the island.
The main peculiarities of buying real estate in Cyprus by foreigners are as follows:
- The purchase of property by non-EU foreigners must be approved by the Council of Ministers. Permits are normally granted without restrictions; the only thing checked is whether you have any past run-ins with the law and whether you have purchased any property in the island country before.
- A non-EU buyer can only own two properties with a total area not exceeding 4,014 m². You can get around the restriction by registering title in the name of relatives or a private company.
What kind of real estate can be bought by a foreigner?
Local legislation allows overseas nationals to buy any type of residential property, including land plots, apartments, and villas in Cyprus, provided they acquire no more than two units up to a total of 4,014 m².
Foreigners are also allowed to buy commercial properties within the established quota, which is two units per family. However, if you buy a floor in a building or an entire building with office space, you are issued a single title deed for them, and they are considered one unit.
Stages of real estate registration procedure in Cyprus
Finding a lawyer or agent
Legal services may include due diligence, review and preparation of a contract of sale (COS), negotiation of a contract, closing a deal, registration of a COS with the Land Registry Office (LRO) to transfer the title, applying to the tax authorities for a reduced VAT rate, and applying for permission to buy Cyprus property.
For doing legal due diligence and preparing the transfer of property (from reviewing the contract to its execution), they normally ask from €2,000 to €5,000 or 1% of the sale price.
Your lawyer or authorised representative will conduct a background check with the LRO to verify if the seller is the rightful owner and if there are any legal encumbrances.
If the property is a plot of land, the agent can search for and verify the appropriate area, building size, and allowable development density. In addition, they can apply to the relevant authorities to ensure that the necessary planning and construction permits are in place.
Creating a bank account
The process of purchasing property begins with opening an account with one of the local banks. It will be used to make all payments related to the acquisition of property.
To open a bank account, you will need:
- International passport;
- Passport of the country of residence;
- A letter of recommendation from a bank you are a client of;
- Proof of the source of funds or tax return for the last two years;
- Bank account statement.
To activate the account, you will need to make a deposit of at least €200.
Reserving a property
Once you have made your choice, you will need to pay a deposit. First, a preliminary contract is drawn up. The booking fee is calculated on the purchase price and is usually 1–2%, averaging between €5,000 and €10,000. Your agent or lawyer retains this sum until the COS is signed. Once you reserve the property, it is removed from sale, and the price is frozen.
If the transaction continues, a reservation fee is added to the purchase price. If the buyer initiates the termination of the transaction, the deposit is not returned, but if the transaction fails due to the seller’s fault, you get your money back in full.
Important! If the buyer cannot personally attend the transaction, you can issue a general power of attorney for your lawyer or agent.
Signing a contract
The signing of the COS can be attended by the buyer and seller, along with lawyers, or their authorised representatives. It can be carried out in the island itself or in any representation in your country. The contract, drawn up in English, is binding and is executed equally by both parties. The content of the contract should reflect the characteristics of the property and the transaction payment terms.
There are no restrictions if real estate is purchased by Cypriots and EU nationals. Nationals of non-EU states require permission from the Council of Ministers. You must submit the application along with the signed COS. Approval is usually granted within a month.
Making payment
Settlements between the buyer and the seller are made via bank transfers. After signing the contract, the buyer transfers 30% of the property value. The rest of the price is paid after the buyer receives approval to make a purchase from the Council of Ministers and the transaction is registered with the LRO. If the property is purchased in instalments, it is necessary to draw up and agree on a payment schedule in advance.
Reduced VAT
The costs of buying and selling real estate in Cyprus include the payment of VAT. In accordance with EU law, all new properties are taxed at the standard VAT rate of 19%. But here is a perk: you are eligible for the reduced rate of 5% if you meet certain criteria:
- You are an individual over 18 years of age.
- The property will be used as the primary and permanent domicile for the next 10 years.
- The reduced rate has not previously been used by the same individual.
- The reduced rate applies only to the first 200 m² of property. The rest of the area is subject to the standard rate.
Obtaining a title deed
The final stage of the transaction is a written statement confirming the purchase and sale. It, along with a copy of the passport, must be submitted to the Council of Ministers, and stamp duty must be paid. Within 60 days after signing the contract, it is necessary to register the transaction with the LRO. The title deed is issued in the presence of the buyer and seller.
Real estate taxes in Cyprus
Property in the island is subject to the following taxes:
- Standard property tax: Owners are required to pay this tax annually. Its size depends on the property value and is calculated based on the tax scale. It is usually charged in the range from 0.6% to 1.9% of the assessed value.
- Property transfer fee is charged upon purchase and is typically 1.5% of the price up to €85,000 and 2.0% above that amount.
- Land tax: Land owners are also subject to taxation. The amount depends on the area and value of the land plot and is calculated in accordance with the tax scale.
- Value added tax (VAT): In some cases, transactions with new properties are subject to VAT. The rate is 19%.
It is important to note that tax rates and taxation rules may vary depending on your individual situation. It is recommended that you consult with a professional tax advisor or a certified agency to obtain up-to-date information on mandatory payments to the tax authorities in the island country.
How to conduct a remote purchase of real estate
Buying and registration of real estate in Cyprus in 2024 can be done online. Your interests in the process of purchase and sale can be represented by a trustee or an authorised lawyer, in whose name a power of attorney should be issued beforehand. With this power of attorney, the representative will be able to participate in the transaction on your behalf and conduct the stages of buying real estate in Cyprus, including signing the contract and transferring the title to a new owner.
We will help you become a real estate owner in Cyprus!
Cyprus-Real.Estate experts will make the search and purchase of real estate as comfortable and safe as possible. Contact a specialist to find out more about how to buy real estate in Cyprus for business and life, and get professional support for a legally transparent sale and purchase transaction.