PURCHASING AND COSTS
In recent years Cyprus has become a popular place for the acquisition by foreigners of holiday houses. This increase in demand is attributed to many factors, like low cost of living and its high standard, the hospitality of the local population, the attractive climate, safety, security etc.Restrictions
Cypriots or persons of Cypriot origin are allowed to purchase real estate property without any restrictions.
Non-Cypriots, however, are only given permission to acquire one of the following:
In certain cases, it is possible that the Council of Ministers will grant approval for the acquisition by an alien of a larger area of land, if the land is to be used for touristic development (eg. hotel or hotel complex) especially if the intended project is in an area where the Government wishes to promote tourism. A similar stand is taken for certain industrial sectors.
Definition of Alien
Alien means any person who is not a citizen of the Republic and includes an alien controlled company. It does not include Non-Cypriots of Cypriot origin or the alien wife of a person who is a citizen of the Republic.
Definition of Acquisition
Acquisition of real estate includes:
Application to the Council of Ministers
The acquisition of real estate property by Non-Cypriots requires the approval of the council of Ministers under the Immovable Property Acquisition (Non-Cypriots) Law Cap.109.
Application Form Details
Are the following:
The letter of approval or refusal may take six to nine months, but in the meantime there is no restriction in taking possession of the property.
The permit for the acquisition of immovable property by an alien is granted only if:
The permit has the following conditions and restrictions:
Application to the Central Bank
The Central Bank will provide a certificate evidencing that the purchase consideration was paid in foreign exchange on submission of the following documents on form EC/NR/01:
Application to the District Land Office
The transfer of ownership is effected at the District Land Office on submission in person (or by appointing a third party by specific Power of Attorney) of the following documents:
Central Bank Exchange Control Regulations
Capital Gains Tax
On disposal of the property, there will be capital gains tax at the rate of 20% on the gain but the first Cú10,000 will be exempt and there is also an indexation allowance. However there is no tax if the property was acquired between 1st August 1980 and 13th July 1990 with foreign exchange imported into the Republic.
There will be no estate duty payable on death in the case of a retirement home because the property was acquired with foreign exchange.
When the immovable property is registered in the name of the purchaser by the Land Registry office he has to pay the transfer fees at the following rates:
The purchaser is liable to the payment of transfer fees on the basis of the value of the property as assessed by the District Land valuers.
In order to avoid the payment of a fine the purchase contract should be stamped within 30 days of its signing at the rate of 1.5 per thousand up to Cú100,000 and thereaffer at the rate of 2.0 per thousand.
1% of the amount secured, plus the relevant stamps on the various documents.
Some banks can offer mortgage facilities in connection with the purchase. The maximum amount that can be borrowed is the equivalent of 60% of the purchase price. Facilities cannot be arranged in Cyprus Pounds. A first mortgage will be required and the mortgage will be granted for 5-7 years. Normally the interest rate charged will be 2.5% above sterling base rate or dollar prime rate. There is also an additional arrangement fee of 1% payable on the amount of the advance.
The necessary action to be taken by persons acquiring real estate is as follows: