Cyprus - a buyer's guide

About Cyprus

Cyprus is the third largest island in the Mediterranean, strategically situated between Europe, Africa and Asia. With a rich history and culture, going back over 9000 years, the island is the legendary birthplace of goddess Aphrodite, brought by the ocean waves to the golden shores of Paphos.

Cyprus has been the coveted prize of every great civilization; the Roman, Egyptian, Venetian, Ottoman and British empires, all left their mark on the island, enriching further its greek heritage. Nowadays, Cyprus is an independent European country, combining great natural beauty, sandy beaches, warm climate (over 330 days of sunshine a year!), friendly and hospitable people and a very sound economy - the perfect place for holidays as well as permanent living.

Cyprus is a member state of the European Union, a member of the United Nations and the Commonwealth. In January 2008 Cyprus has joined eurozone. On 1 January, the Cypriot pound was converted at a rate of 0.585 to one euro.

The island has excellent air transport connections with the rest of the world, from the two international airports in Larnaca and Paphos. The ports of Larnaca and Limassol serve both cruise liners and cargo vessels.

Living in Cyprus

The official currency of Cyprus is the Cyprus Pound, divided into 100 cents.

The official language of Cyprus is Greek but English are widely spoken as a second language. Radio, TV and satellite services are available in English and there is a range of local and international English language publications.

Telecommunication facilities are excellent with direct-dial access to over 200 countries. There are cell phone networks and advanced internet connections.

In Cyprus, traffic drives on the left (as in the UK). Road signs are in both Greek and English. There is an extensive network of roads and motorways.

Cyprus has one the lowest crime rates in Europe.

The cost of living compares favourably to that of the UK and other European countries; goods and services are reasonably priced, local markets sell an abundance of fresh fruit and vegetables, fish and meat at low prices, while large supermarkets stock a wide range of local and imported goods.

Residential Permits

Residential permits are issued to property buyers provided they can prove that they are able to support themselves. An annual income of CYP 5000 per person is usually considered satisfactory. You don't need a permit if your visits are for less than three months at a time.

Real estate in Cyprus

Real estate prices in Cyprus have seen a healthy increase over the last few years and it is expected that they will rise further, in the near future. Despite these increases, properties in Cyprus continue to offer excellent value for money to foreign investors and they are lower than many other popular European destinations.

Cyprus has an excellent property registry system and titles are deposited with the Land Registry Office (Title Deeds Registry). Once a sales agreement is signed and a deposit paid, the contract is deposited at the Land Registry to protect the buyer's ownership rights until the title deeds have been issued and transferred into the buyer's name.

Mortgages

Finance on property purchases is available from the island's banking institutions - up to 70% of the purchase price (sometimes more). Interest rates are very competitive. Mortgages can be obtained in all major currencies, but will usually be in the currency of your income.

Property Ownership by foreign buyers

The process of purchasing property in Cyprus by foreigners is simple:

- Europeans are entitled to freehold ownership of one villa or one apartment (this restriction is expected to be abolished soon). In respect of plots of land, Europeans can purchase as many and for any extent. Europeans who acquire residents permit can register in their name as many properties as they want, provided they will stay in Cyprus for the following five years.

- Non Europeans are entitled to freehold ownership of a villa, an apartment or pieces of land, with a maximum allowance of approx. 4000 sq.m.

- Foreign companies can acquire premises for their business or for a holiday home for their directors.

It is recommended that foreign buyers take independent advice from a lawyer familiar with assisting non-Cypriots purchase property in Cyprus.

Property insurance

Given the low crime rate on the island, buildings and contents insurance is very affordable.

Taxes & costs

Cyprus has one of Europe's lowest rates in property taxes and fees. When buying property, the buyer needs to pay VAT, Transfer Fees and Stamp Duty.

VAT (Valued Added Tax)

Since 1st May 2004, VAT on new properties was introduced, at a rate of 15%. This is payable by the buyer and is calculated on the value of the purchased home.

Transfer Fees

A one-off transfer fee is payable to the Land Registry, based on a sliding scale: 3% on the first CYP 50,000, 5% on the value between CYP 50,000-100,000 and 8% on the value exceeding CYP 100,000.

Stamp Duty

This is currently set at CYP 0.15 for the first CYP 100,000 and at CYP 0.2 above it. Stamp duty is payable upon signing the sales contract.

Solicitor's fees

These are around 1% of the purchase price.

Annual Property Tax

The annual immovable property tax is calculated on the market value of the property as at 1st January 1980, with properties valued under CYP 100,000 being exempt. For properties valued over CYP 100,000 tax ranges from 0.25% to 0.4%.

Capital Gains Tax

On disposal of a property, capital gains tax is payable at the rate of 20% on any profit made, above CYP10,000 which is the allowance for each person. This allowance can only be utilised once in a person's lifetime. If a property is bought jointly i.e. by husband and wife, they can each use their allowance.

Profit is calculated as the difference between the sales proceeds and the original cost of the property, minus costs incurred for the purchase and for any work carried on the property since. There is also an allowance for inflation.

Gains from the sale of a house are exempt up to CYP 50,000 if the owner lived in it continuously for at least five years prior to disposal.

Local Authority Rates

This tax is for refuse collection, street lighting, sewerage, etc. and rates vary from CYP 50-150 per year, depending on the size of the property.

Utilities - electricity, water and telephone - are payable individually based on consumption.

Income Tax

Cyprus has one of the lowest income tax rates in Europe.
Income below 10,000 CYP per year is exempt.
For income between 10,000-15,000 CYP, the rate is 20%
For income between 15,000-20,000 CYP, the rate is 25%
For income over 20,000 CYP, the rate is 30%

Retirees who become residents in Cyprus are taxed on their pensions from abroad at the rate of 5% per annum with the first CYP 2,000 exempt.

Inheritance Tax

Estate Duty or Inheritance Tax was abolished in Cyprus as of 1.1.2000.

Double Taxation Agreements

Cyprus has Double Taxation treaties with 40 European and other countries, safe-guarding its residents from paying tax in both countries.