Procedure of buying/selling a property and the tax/legal environment in Cyrpus
Buying a Property
Step 1: Initial Consultation
- Contact Lextrus Real Estate to discuss your real estate needs and preferences.
- Our expert agents will communicate with you to understand your budget, requirements, desired property features and location.
Step 2: Property Search and Selection
- Our dedicated team will provide you with a curated selection of properties that match your criteria.
- We will arrange property viewings, accompany you to the sites, and provide detailed information about each property. If you are abroad we can assist you with online viewings.
Step 3: Negotiation
- Once you ve identified a property of interest, our experienced agents will skillfully negotiate with the seller on your behalf to secure the best terms and price.
Step 4: Reservation Agreement
- Lextrus Real Estate will facilitate the signing of a Reservation Agreement with the seller.
- You ll pay a reservation fee to reserve the property and remove it from the market.
Step 5: Sales Contract
- We prioritize your peace of mind. Rest assured, we collaborate with trusted legal experts who meticulously prepare sales contracts, ensuring a smooth and secure legal process for you.
- We ll guide you through the contract, ensuring clarity and transparency.
- You ll make an initial payment, typically 10%-20% of the purchase price, to the seller.
Step 6: Due Diligence
- Lextrus Real Estate will oversee the due diligence process, ensuring that all legal requirements are met, and that the property is in compliance with regulations.
Step 7: Stamp Duty
- Our team will assist you in the process of the applicable stamp duty
Step 8: Land Registry
- We will help you register the Sales Contract with the Land Registry Office, establishing your legal ownership rights.
Step 9: Completion and Handover –
You can now take possession of your new property, all while our team at Lextrus Real Estate guides you through the title deed transfer process, ensuring a seamless transition into your ownership. We can further assist you with renting your property either long term or short term or renovating it.
Selling a Property
Step 1: Engage Lextrus Real Estate
- Contact Lextrus Real Estate to list your property for sale.
- Our experienced agents will guide you through the selling process.
Step 2: Property Valuation
We stay up-to-date with the latest market trends, economic factors, and property values in your
neighborhood. Our insights can help you make informed decisions regarding the price.
- Our expert team, if you wish may conduct a comprehensive property valuation to determine
an accurate listing price at the reasonable cost.
Step 3: Marketing
- Lextrus Real Estate will launch an extensive marketing campaign to showcase your property
to potential buyers, utilizing our network and online platforms.
Step 4: Buyer Negotiations
- We will negotiate with prospective buyers on your behalf to secure the best sale price and
terms.
Step 5: Sales Contract
We collaborate with trusted legal experts who meticulously prepare sales contracts, ensuring a
smooth and secure transaction for you. Always you have the option to assign your own lawyer
to assist you for the selling process. We assist you to collect the deposit from the buyer.
Step 6: Tax Department Application
- The seller will submit an application to the tax department to address any applicable taxes,
such as capital gains tax (if applicable) or other taxes. We can guide you for the process of
the tax.
Step 9: Completion and Handover
- Complete the sale transaction in the land registry, secure the settlement of the remaining balance of the deal, with confidence and reliability.
LEGAL AND TAX PROCEDURE IN CYPRUS
Fast-Track Option for Permanent Residency:
Cyprus Permanent Residency is a legal status that allows Non-EU citizens and their qualifying dependents to live in Cyprus as permanent residents indefinitely, without any renewal requirements. It is also referred to as a Cyprus immigration permit or unlimited residency.
- To obtain Permanent Residency quickly, you need to invest at least €300,000 in real estate in Cyprus. This investment covers your entire family and doesn t have an expiration date
Fast-Track Procedure for Permanent Residency (Investment Option):
- To qualify for fast-track permanent residency, you must:
- Purchase a new property in Cyprus for at least €300,000 (plus VAT of 5%).
- Show an annual secured income of at least €50,000 from abroad, with additional income required for dependents.
- The property can be registered in your name or a company you own.
- You can buy up to two properties to meet the investment requirement.
- If you sell the property, you must replace it with one of equal or higher value.
+ You are not allowed to rent the property when you bought it under the permanent residence scheme.
7. Family Members:
- Your spouse and children up to 18 years old are covered by your Permanent
Residency permit.
- Children between 18 and 25 years old can apply separately for a student immigration permit if financially dependent on you.
. Other Conditions:
- Applicants must provide a clean criminal record and maintain one every three years.
- Applicants must not pose a danger to public order/security in Cyprus.
- 3. Processing Time: – Fast-track Permanent Residency can be obtained in about two months.
- 14. Government Fees: – There are fees associated with the application,
registration, and additional fees for dependents. - 15. Benefits of Cyprus Permanent Residency:
- Permanent residency is valid for life.
- The whole family can apply for residence permits. – After five years of legal residence, you can apply for Cyprus citizenship.
- Fast-track process takes around two months. – You may be eligible for Cyprus
Tax residency, offering tax advantages.
- Access to the General Healthcare system and free healthcare.
- Keep in mind that the requirements and procedures may change over time, so it is essential to consult with legal experts or Cyprus authorities for the most up-to-date information and guidance on the Cyprus Permanent Residency program
Permit to purchase a property in Cyprus by non EU citizens
Non-EU citizens can purchase immovable property, nevertheless, permission must be sought from the Council of Ministers by written application, which must be submitted by the non-EU citizen purchaser after the contract of sale is signed. Permission is given more or less as a matter of course to all bona fide purchasers.
The acquisition of immovable property in Cyprus by non-Cypriots is regulated by the Immovable Property Acquisition (Aliens) Law and the Directives of the Central Bank of Cyprus.
Alien
According to the above law, an “alien” is defined as any person who is not a citizen of the Republic of Cyprus including:
i. a company controlled by aliens
ii. a foreign company and
iii. a trust, the beneficiary of which is an alien.
Restrictions
On 12/12/2012, the Ministry of Interior announced that third-country nationals (aliens) may acquire more than one unit of immovable property in Cyprus, with the aim to invite investment into Cyprus (from third countries) and to strengthen the licensing policies regarding migration to Cyprus. According to the Law, third country nationals are imposed with certain restrictions while purchasing immovable property in Cyprus. These are as follows:
a) A building plot or a piece of land not exceeding 4014 sq.m. for the construction of a house thereon to be used as private residence OR
b) Two residential units in the same building development on condition that such units are in proximity (horizontally or vertically) where such units relate to a house or flat where unification into one unit is possible OR
c) One residence unit and one shop, the latter not exceeding 100 sq.m. OR
d) One residence unit and one office, the latter not exceeding 250 sq.m..
In the event of a married couple, the above restrictions will apply to the couple as if the couple is a single applicant (one entity). It should be noted here that in case of a married couple, only one permit will be granted.
Residence Permits
Third country nationals acquiring immovable property in Cyprus may under certain circumstances be eligible to apply for an immigration permit. Further, non-Cypriot investors may receive citizenship through naturalization if they meet some criteria. Applicants for immigration permit (Category E) are treated more favourably if they have purchased a house in Cyprus at a price of at least €300,000 plus VAT to be used as their private residence. This category of immigration permit is equivalent to a permanent residence permit.
Things to consider
As a general rule, when one purchases a piece of land or a house, the seller must have a title deed in his name, which can be transferred to the purchaser. However, there are times when there is no such title deed in existence for the land/property in question. These are matters which the purchaser’s lawyer must consider and embody in the contract, as well as take all necessary steps so as to safeguard client’s interests.
Discover the Tax Advantages of Investing in Cyprus Real Estate
Are you considering international real estate investments? Cyprus offers a unique blend of Mediterranean beauty and attractive tax benefits for foreign investors. Here is why investing in Cyprus real estate is a smart financial move:
- Low Property Taxes: Cyprus boasts one of the lowest property tax rates in Europe.
Property owners benefit from affordable property taxes, making it an excellent choice for
long-term investment. - Attractive Capital Gains Tax Exemptions: When you decide to sell your Cyprus
property, you ll be pleased to know that you may be exempt from capital gains tax,
provided certain conditions are met. This means more profit in your pocket. - Non-Domiciled Tax Regime: Cyprus offers a Non-Domiciled Tax Regime, which can
be exceptionally advantageous for non-resident investors. It allows you to enjoy tax
benefits on foreign-sourced income, such as dividends, interest, and rental income. - No Inheritance or Wealth Tax: Cyprus doesn t impose inheritance or wealth taxes.
This means you can pass your Cyprus real estate assets to your heirs without worrying
about hefty tax burdens. - Double Taxation Treaties: Cyprus has an extensive network of double taxation
treaties with numerous countries. These treaties ensure that you won’t be taxed twice
on the same income, making cross-border investments more efficient. - Strategic Location: Cyprus’s strategic location at the crossroads of Europe, Asia,
and Africa positions it as a key investment gateway. It is an ideal base for real estate
investments with global perspectives. - Robust Rental Income: Cyprus’s thriving tourism industry offers excellent
opportunities for rental income. Whether you are investing in vacation rentals or long-term
leasing, the potential for profit is substantial. - Dividend Participation Exemption: If you are investing through a Cyprus company,
you can benefit from the Dividend Participation Exemption. This means that dividends
received from other companies, both local and foreign, can be exempt from corporate
income tax. - Intellectual Property Benefits: If your investment involves intellectual property
assets, Cyprus offers a favorable regime for IP income, potentially reducing your tax
liabilities.
Cyprus’s tax advantages, along with its stunning landscapes, rich culture, and vibrant economy, make it a top choice for foreign real estate investors.
At Lextrus Real Estate, we specialize in helping international investors navigate the Cyprus real estate market. Whether you are looking for a luxurious seaside villa, a cozy apartment in the heart of a vibrant city, or a lucrative investment property, our expert team is here to assist you every step of the way. Invest smart, invest in Cyprus. Contact us today to explore your real estate investment opportunities in this tax-friendly paradise.
Navigating Capital Gains Tax (CGT) and Transfer Fees in Cyprus
Are you considering buying or selling property in Cyprus? It is important to be well-informed about the tax implications and transfer fees associated with property transactions. At Lextrus Real Estate we believe in providing our clients with clear guidance on these matters. Here is what you need to know:
Capital Gains Tax (CGT)
Understanding CGT Rates:
- The rate of CGT in Cyprus is 20%, applied to profits from the sale of immovable property located in Cyprus.
- Capital gains from the sale of immovable property outside Cyprus are exempt from CGT.
Calculating Taxable Gains:
- Taxable gain is the difference between the sale price and the original cost of the property plus refurbishment costs.
- The original property cost must be adjusted for inflation from the date of purchase (not earlier than 01 January 1980) up to the disposal date, using the Cyprus consumer price index.
Example:
- Selling Price (on 30/01/2009): €450,000
- Cost of Acquisition (on 01/01/2000): €250,000
- Inflation (01/01/2000-30/01/2009): €250,000 x 206.97 / 165.52 = €312,605
- Taxable Profit: €450,000 – €312,606 = €137,394
Capital Gain Exceptions:
1. First Exemption (€17,086): This exemption applies to gains from the disposal of
any property.
- Taxable Profit: €137,394 – €17,086 = €120,308
- Tax: 20% of €120,308 = €24,062
Note: If property owners are a married couple, the exemption is €17,086 * 2 = €34,172.
2. Second Exemption (€85,430): Applies to gains from the disposal of a primary residence owned and used as such for at least five years.
- Taxable Profit: €137,394 – €85,430 = €51,964
- Tax: 20% of €51,964 = €10,392.8
3. Third Exemption (€25,629): Relates to agricultural land sold by farmers.
Exempt Disposals:
- Gifts and donations between relatives (up to the third degree).
- Donations to support charitable organizations and the Government.
- Land sale exchange complying with Agricultural Law.
- Expropriations.
- Property exchange for the purpose of purchasing another property.
- Gifts to family companies (conditions apply).
- Gifts by family companies to their shareholders (conditions apply).
- Transfer for organizational purposes.
Transfer Fees
Property Value vs. Transfer Fee (%):
- Up to €85,000: 3%
- €85,001 – €170,000: 5%
- Over €170,001: 8%
Exceptions:
- No transfer fees for properties subject to VAT.
- If no VAT is paid on the purchase, transfer fees are reduced by 50%.
Understanding CGT and transfer fees is crucial for making sound real estate investments in Cyprus. At Lextrus Real Estate, we offer expert guidance to help you navigate these tax aspects and make informed decisions about your property transactions. Contact us today for personalized assistance tailored to your real estate needs.
Understanding Property Transfer Fees in Cyprus
Are you considering buying property in Cyprus? It is essential to understand the property transfer fees associated with your investment. At Lextrus Real Estate, we believe in providing our clients with comprehensive information to make informed decisions. Here is a breakdown of property transfer fees in Cyprus and the recent updates announced by the Cyprus Parliament.
Property Transfer Fees Based on Property Value:
The property transfer fees in Cyprus are calculated based on the property’s declared
value. Here is how the fees are structured:
- For properties with a value up to €85,000, the transfer fee is 3% of the property’s
value. - Properties valued between €85,001 and €170,000 incur a transfer fee of 5%.
- For properties valued over €170,001, the transfer fee is 8% of the property’ s value.
Recent Legislative Changes:
The Cyprus Parliament has introduced some significant changes aimed at reducing or abolishing property transfer fees. These changes can have a positive impact on your property transaction:
- Total Exemption with VAT Transactions: If your property transaction is subject to Value Added Tax (VAT), you are eligible for a total exemption from property transfer fees. This is a substantial benefit for those investing in newly built properties or properties subject to VAT.
- 50% Exemption for Non-VAT Transactions: In cases where your property transaction is not subject to VAT, such as the resale of a property, the legislation provides a 50% exemption on the amount of transfer fees. This reduction can significantly ease the financial burden associated with property transfers.
- Total Exemption for Company-Owned Properties: If the property you are acquiring is registered as a sole property within a company, and the transaction involves the purchase of that company or property, you will receive a total exemption from property transfer fees. This exemption is designed to facilitate corporate property acquisitions.
Calculating Your Transfer Fees:
To help you calculate your property transfer fees accurately, we have provided a user-friendly calculator on our website. Simply input your property’s value, and our calculator will determine the applicable fees, taking into account any exemptions or reductions based on the recent legislative changes.
At Lextrus Real Estate, we are committed to simplifying the property buying process for our clients. We understand that navigating property transfer fees and tax regulations can be complex, and we are here to assist you every step of the way.
Contact us today to explore our wide range of properties in Cyprus and to receive expert guidance on property transfer fees and related matters. Your dream property in Cyprus is within reach, and we are here to make it a reality while ensuring a smooth and transparent transaction.
