Registration and purchase of property in Southern Cyprus (taxes and fees)

Contract of sale

The lawyer is responsible for preparing the contract of sale and is obliged to enter the terms, conditions and terms of the contract in a fair manner in order to protect the interests and rights of the client and to ensure the accuracy of the property information and documents by inquiring about the legal documents of the property. . The lawyer is obliged to ensure that all the details in the document match the details of the property and also to make sure that the property can be sold to the buyer. Once the draft contract has been prepared with the buyer’s consent and approval, it will be signed by the buyer himself or by a lawyer who has a power of attorney. Granting a lawyer power of attorney enables him or her to complete all stages of the transaction, including additional actions and other documents.

Tax stamp

Once the contract is signed, the buyer is responsible for paying the tax stamp duty. For example, if the contract value is € 300,000:

• There is no stamp duty fee for the first 5,000 euros.
• The next € 165,000 is calculated at a rate of € 1.50, ie € 247.50 = 1,000 ۵ 1.5x 165,000
• The next € 130,000 is calculated at a rate of € 2,000, ie € 260.00 = 1,000 ÷ 2.0x 130,000

These costs must be paid within 30 days of signing the contract to avoid being fined.

Registration of the sales contract in the Real Estate Registry

From the date of signing the contract, the buyer has the right to register the contract with the Real Estate Registry within 6 months, this is due to the existence of the law “Special Performance Objectives”. This is very important for the protection of the buyer’s rights, and there are two main reasons for doing so: By registering a contract with the Real Estate Registry, the buyer prevents the transfer of immovable property to third parties and gains the right to search the special performance system. Also, even if the seller does not want to participate in such processes, the right to transfer real estate to the buyer is reserved.

Property VAT

Property units that received their license before May 1, 2004 are exempt from VAT. Since Cyprus joined the European Union, VAT, which currently stands at 19%, has been paid when a buyer buys land or a house.

However, buyers who buy a home will be required to pay 5% VAT if they meet the following conditions:

• The license application was made after 01/05/2004.
• The buyer uses the purchased property as her main and permanent residence in Cyprus and does not own any other property in Cyprus.
• 5% VAT is applied only for the first 200 meters of the property.

Total area: means the total area of ​​the property, including the engine room, parking lot and balcony.

Transfer cost

In real estate transactions, the transfer of ownership is done through a simple registration process at the Real Estate Registry and the buyer is responsible for paying the transfer fee.

• Buyers who are subject to VAT and pay it are exempt from paying the transfer fee.
• Transfer costs for buyers who are not subject to VAT on real estate will be reduced by up to 50%.

Calculate costs

Up to 85,000 euros, 3% € 85,000.01 to € 170,000.00, 5% 170,000.01 and up, 8%

Capital Gains Tax

Any financial gain resulting from the sale of real estate in Cyprus must be subject to a 20% capital gains tax, with an initial exemption of € 17,086 per person. Profit is the difference between the sale price and the original price of the property. If the property was purchased before January 1, 1980, the profit is the difference between the sale price and the market price of the property on January 1, 1980.

The seller has the right to include the annual inflation rate and any additional costs imposed on the home in its price, depending on the transfer costs paid.

Profit from the transfer or sale of private property in which the pre-sale owner resides for 5 years and is permanently exempt from capital gains tax of up to € 85,430.

Inheritance tax

Inheritance tax is obsolete in Cyprus.

Cost of local references

Depending on the size of your property, local authorities may charge between € 85 and € 500 a year for garbage collection, street lighting, sewage and similar services. You can pay for public services to your local municipality.

Municipal tax

As a registered owner, you must pay an annual fee as municipal tax, which is calculated based on the market value of the property on January 1, 1980. Rates vary from 1 to 2 percent.

You can pay municipal taxes to your local municipality.

Sewage tax

As a registered owner, you must pay an annual fee as a sewage tax, which is calculated based on the market value of the property on January 1, 1980. Rates vary from 3 to 7 percent.

You can pay the sewage tax to your local municipality.

Buy property in Southern Cyprus

Purchasing Property

Rights of buyers without Cypriot citizenship

When non-Cypriot buyers purchase immovable property in Cyprus, they will enjoy all rights, including those of Cypriot citizens.

Contract of sale

The sales contract concluded between the seller and the buyer requires both parties to fulfill the relevant obligations. The seller or one of the sellers who has signed the contract must be the registered owner of the property or part of the property to be sold.

After concluding the contract, the buyer is responsible for paying the stamp duty (see below). It is recommended that the sale contract be registered within 2 months from the date of the contract at the Registry Office of the area where the property is located. Payment of the contract registration fee is the responsibility of the buyer and the amount is 50 Euros.

The purpose of this work is to protect the interests of the buyer and also gives him the “special right of action” which is completely in the interest of the buyer and is to protect the security of his capital. By registering the contract with the Real Estate Registry Office, the buyer will be recognized as the original owner of the property until the final document is issued.

Property document

When the document is issued in the name of the buyer, it is recorded in the archive. It should be noted that this document is confidential and will not be publicly accessible under any circumstances. According to the Land Sale Law (Special Performance Law), Law 81 (I) 2011 protects the rights of buyers and sellers. To be eligible under this law, the contract of sale must be submitted to the Cyprus Registry.

Registration of a contract with the Cyprus Real Estate Registry is a guarantee of the property in question.

co-ownership

If the property you are considering is part of a joint property, for example an apartment unit or part of a plot of land, then the contract must be arranged accordingly and signed with the joint owners. The joint owners of the common spaces of the property in question prepare a declaration and register it in the Real Estate Registry. This declaration will be considered when issuing the document. In the event of any problems or misco

nduct, you can settle your claim and submit it to the Cypriot court, in which case the court will issue an order to the parties to the contract and oblige them to fulfill the obligations mentioned in the contract.

A petition submitted to a court for a special action order can take several forms. For example, it may be an order that requires the completion of a sales contract or the performance of any of the other clauses of the contract, or it may require the termination of the property loan, if the relevant court ensures that the loan debt is repaid.

To be sure, we need to explain that real estate or assets include land, buildings, fixed furniture, land-based cartels, as well as land rights. The law also stipulates that the agreement or contract between the parties must be in writing and include the full details of the parties to the contract as well as the full details of the property being traded and signed by the parties to the contract.

Contrary to the potential dangers of buying property in other countries, Cyprus has never been involved in the nationalization of any part of its economy or the expropriation of stateless Cypriots, in line with the Cypriot government’s efforts to create a safe environment for foreign investors.