Conveyancing in Cyprus: Cyprus Property Purchase Laws
Information on the legal system in Cyprus with regards to buying property and the correct legal steps to be followed. Who may buy property, the restrictions and the registration of land with the Cyprus Land Registry Office...
The right to ownership in Cyprus is protected by the provisions of the Constitution of Cyprus. Cyprus accession into the EU on May 1st 2004 has led to several amendments to domestic laws so they can be harmonised with EU law. EU citizens and legal entities are not subject to any restrictions to the right to buy property in Cyprus. Non-EU citizens must still apply for a permit from the Council of Ministers to acquire immovable property in Cyprus even if they are the spouse of an EU citizen.
A. Property Reservation
Seller offers and buyer accepts = signing the contract for property reservation. Reservation fee has to be paid.
B. Search with the Land Registry
A property search is conducted to identify any potential charges and/or encumbrances on the property.
C. Contract of Sale Deposited at the Land Registry
The contract of sale is prepared and is signed by both parties. It is then stamped by the Inland Revenue Office and deposited at the District Land Registry Office.
The purchaser is liable to pay stamp duty at the following rates:
- 0% of the first €5,000 of the purchase price.
- 0.15% of €5,001 - €170,000 of the purchase price.
- 0.20% for any amount over €170,000.
Once the contract of sale is deposited at the Land Registry, the buyer has his rights fully secured even if he does not actually have the title deeds yet. From the day of deposition of the Contract of Sale at the Land Registry until the moment the title deeds are issued, the purchaser has the right to exercise all legal propriety rights (sell the property/ rent it/ gift it/ mortgage it, etc.).
D. Transfer Fees
The purchaser is liable to pay the transfer fees at the rates seen below when the acquired property is registered in his/her name at the Land Registry Office.
- 3% on the purchase price up to €85,000
- 5% on the purchase price from €85,001 to €170,000
- 8% on the remainder of the purchase price over €170,000
It must be noted that the Cyprus Parliament has announced the abolition or reduction of property transfer fees in certain cases. This will apply until the end of 2016 for the circumstances described below:
- Exemption from transfer fees when the transfer relates to a transaction that is subject to VAT. VAT is at the standard rate of 19% but a reduced rate of 5% applies for properties purchased by permanent residents of Cyprus when the relevant property will be used as the main residence of the buyer for a minimum of 10 years.
- For transactions not subject to VAT, the legislation provides for an exemption of 50% of the transfer fees. This applies for transactions where the transfer relates to plots of land and buildings that are sold for the ﬁrst time from the date of issue of the building permit and the contract of sale is deposited for the ﬁrst time with the District Land Registry during the period of application of this law.
- It is absolutely essential to conduct a search with the office of the Land Registry to reveal any potential charges and/or encumbrances on the property.
- It is a good idea to include a contract clause stating that the last payment will take place upon possession.
- When buying a flat in a complex, determine exactly how much you would have to pay for communal expenses.
- If the seller is a company, it is advisable to conduct a company search which will help assess the financial credibility of the seller.
Immovable Property Tax
Every registered owner is liable to pay an annual immovable property tax, calculated on the market value of the property as at 1st of January 1980. The rates can be seen below:
- Up to €40,000 0.60%
- €40,001 - €120,000 0.80%
- €120,001 - €170,000 0.90%
- €170,001 - €300,000 1.10%
- €300,001 - €500,000 1.30%
- €500,001 - €800,000 1.50%
- €800,001 - €3,000,000 1.70%
- Over €3,000,001 1.90%