Legal Information

Legal Information

We advise and recommend that you use an independent solicitor from the one that the Developer or Seller uses, to ensure no conflict of interest.

Points to look out for:
A general terms of payment unless agreed otherwise or the house is not built yet are:
a. 20% Deposit paid on the signing of contracts.
b. 75% on delivery of property or in stages during construction.
c. 5% on transfer of title deeds (this figure varies according to the availability of title deeds).

1. Purchase of the property is completed when you sign the contracts and paid the agreed deposit. At this point you pay stamp duty (see chart) at the tax office and deposit your contract with the Land Registry Dept.

2. Possession of the property is completed when the property is delivered to you when:
a. The second payment is paid. At this stage you connect the utilities (Water, Electricity & Telephone etc)

3. Transfer of the deeds in your names will be take place when:
a. You have a temporary Residency Permit or Council of Ministers Permit. from the District Office
b. The Developer has completed the subdivision of the project and the Lands Office has issued a separate title.

YOUR LEGAL SECURITY IS PROVIDED BY THE FOLLOWING:
1. You sign a valid contract of sale for property from the seller free of any legal and financial commitments.
2. When the contract is signed, stamped and registered with the Land Office. This procedure prevents the seller or developer from reselling or mortgaging the property before transfer of title.
3. You will be entitled to take possession of the property prior and regardless of when the transfer of title takes place.

At this stage you apply at the Immigration Dept for your residents permit to live in Cyprus.

Your interests from the moment you sign the contract is protected by the inheritance laws. This means that should anything happen to you before or after completing the procedures, the property will be transferred to the beneficiaries of your estate either through a Will or by Law.

A. Transfer fees
These are necessary in order to transfer to the name of the purchaser. This takes place as soon as the final payment of your purchase has been settled and the relevant Government Authority has issued the title deed. The purchaser is responsible for the transfer tax payment.

For example if the purchase price is €200.000
First 85.430,07 @ 3% = €2.562,90
Next 85.430,07 @ 5% = €4.271,50
Last 29.139,86 @ 8% = €2.331,19
Total Transfer Fees   = €9.165,59

If the purchase price is over €170.000 it is worthwhile to put the property in joint names.
Should the purchase be made in joint names the effective value for calculation is halved.

For example if the purchase price of €200.000 is divided by two (€100.000)
The 1st buyer
First 85.430,07 @ 3% = €2.562,90
Last 14.469,93 @ 5% = €728,50
TOTAL €3.291,40
The 2nd buyer
First 85.430,07 @ 3% = €2.562,90
Last 14.469,93 @ 5% = €728,50
TOTAL €3.291,40
Making a total of €6.582,80
Department of Lands and Surveys – Transfer fee calculator
Property Donations to Relatives
If the property is donated to husband or wife, from parents to children, or between relatives up to 3rd degree, transfer fees are calculated based on the property value written on the title deed (1980 values) based on the following rates:
If the property is donated to husband or wife 8%
If the property is donated to son or daughter 4%
If the property is donated to other relative 8%

Reduced Transfer Fees 02/12/2011 – 31/12/2014
1. NO TRANSFER FEES where VAT is paid
2. 50% Transfer Fees if the property is transferred for the first time

Transfer of ownership takes place by a simple process of registration at the Land Registry Office and the issuing of a title deed after completion and delivery. This can be done either by you personally or by a Power of Attorney to your Solicitor.

A prerequisite for registration, in the case of aliens, is evidence that the property has been paid for with foreign exchange and approval by the Council of Ministers of Purchaser’s application to buy property in Cyprus.

These formalities can be taken up by your lawyer on your behalf. However, before the registration of the completed property the purchaser should pay the transfer fees to the Land Registry office.

B. Stamp Duty
The purchaser is liable for the payment of Stamp Duty at the rate of 0,15% up to the value of €170.860,14 Τhereafter the rate is 0,2%.

This should be paid within 30 days of signing the contract.
For example if the purchase price is €220.000:

The First €170.860,14 @ 0,15% = €256,29
Next €49.139,86 @ 0,2% = €98,28
TOTAL €354,57

C. Immovable property tax
The annual immovable property ownership tax is based upon the value of the property.

Certain immovable properties are exempt.

Important!
Immovable property tax is based upon the value of the property in 1980 which is much lower than the current market value. So there is no immovable property tax for the majority of properties in Cyprus.

D. Local authority taxes and rates
A rough guide could be approximately €80 – €250 per year depending on the size of your property. This tax is for refuse collection, street lighting, sewerage, etc.

The basic utilities, electricity, water and telephone are payable individually in accordance with the consumption and based on a meter reading

GETTING A MORTGAGE IN CYPRUS
Lenders in Cyprus look at mainly three things before they give out a loan. These are:

1. Security what collateral will be put down towards the loan? The collateral is usually the property that will be purchased.
2. Repayment ability of the borrower. They look at the monthly net income of the potential borrower and his total monthly payments.
3. Contribution By contribution we mean the total amount of money the borrower is willing to put down towards the purchase.

Normally lenders in Cyprus require that 30% of the purchase price is contributed by the borrower. The 30% is for purchases of up to €170.000. For amounts over €170.000 lenders might require a larger contribution from the borrower.

There are no pre-set brackets as to where exactly the contribution should be for amounts greater than €170.000 so it is basically to the banks judgement to decide.

A Bank guarantee is an agreement between the buyer, the developer and the developers bank that ensures that the title deeds will be issued. In case the title deeds are not issued within the specified time limits due to the developers then the buyer has the right to exercise the bank guarantee and get his money back. The bank guarantee, however, comes at an additional cost of 1.8% per year on the amount specified on the bank guarantee.

Income Tax
According to our tax system you are obliged to declare your income from pension or any other sources to tax authorities.

Due to several different groups of taxed income you should contact your legal advisor or the tax authority directly to determine your tax liability. You will find that it is to your financial benefit to opt to pay tax in Cyprus.