Cyprus Property Purchase / Investment
Buying a property is always one of the biggest steps in everybody’s life. If you are a regular/seasonal investor, or an overseas buyer looking for a holiday/retirement house there are always many concerns and questions to ask.
Below you will find some of those that people usually ask and seeking answers. The answers do not intend to cover all possible stages of property investment and purchasing process, but aims to give answers to the most widely and common concerns of investors before they make a final decision. Guidance to our clients is part of our job and during all stages of the buying process.
Question: What is the procedure for buying a property in Cyprus?
Answer: Once you have made a final decision and you selected a property then you need to follow the most common process described below and choose an independent lawyer where all legal actions and due diligence process are undertaken by him. (Property-Link can recommend one of our reputable and high qualified lawyers).
- A deposit of around 1% to 2% of the selling price is required, for the vendor to remove the property from the market and from your end to prove your serious commitment towards the property purchase. Please keep in mind that usually tis deposit is not refundable.
- Your lawyer will liaise with the vendor to prepare and agree on the final sales contract, while he performs a due diligence process about the property. Final confirmation and approval for signing the contract of sale wither by you or through your legal advisor usually occurs within 30 days from the date of deposit.
- Payment of the first installment according to the sales agreement payment schedule is made.
- Upon the payment of first installment – usually the 30% – the registration of the sales agreement into the Land Office, and the payment of equivalent stamp duty are executed.
- For all non-Cypriot buyers, it is recommended that with the registration of the sales agreement to the land office all relevant documents should be submitted to the Council of Ministers requesting the necessary permit to purchase real estate in Cyprus; a process that usually takes 6 months.
- Land registry is informing you that the property title deeds are ready to be transferred to your name – usually within a period of 2-3 years – and a relevant transfer of title deed tax must be paid in advance.
Question: There is VAT on plots/land in Cyprus; and if yes what is the % rate?
Answer: Since January 2018, a VAT tax is imposed on the transactions of undeveloped building plots and land which are carried out for business or economic purposes and activities at the standard rate of 19%. However, the supply of land is not subject to 19% VAT in cases where the supply and sale of a plot or land is an occasional transaction, while also the above VAT rate can apply even if the vendor is not a developer, contractor or in the business of selling land.
Question: There is VAT tax on secondary and resale properties?
Answer: No VAT tax is imposed on all used/resale properties. If a property had been sold and or rented and the property had been occupied for a minimum period of 6 months no VAT tax is payable on this property.
Question: There is VAT tax on the purchase of newly built properties?
Answer: Yes, for all newly built properties available for sale to all first time buyers a Value Added Tax of 19% rate is imposed on the purchase price of the property.
Question: Who can assist me in the future, if and when I decide to sell or rent my property?
Answer: Property Link Cyprus is a professional realty being in the market for many years. Our dedicated team can take over this concern and via our marketing approach and extended network we guarantee the sale and/or rent of your property within a reasonable time frame.
Question: What is the best way to secure the best possible selling price for my property?
Answer: Through sales of similar properties in the same area via personal search or access to Land office information and statistics you can set a fair price for your own. Additionally by contacting real estate professionals and valuators they can also estimate the selling price of your property per square meter through various methods.
Question: What are the main benefits of a tax resident in Cyprus?
Answer: The tax regime in Cyprus is one of the best and lowest in the European Union, which amongst other has no inheritance and wealth tax, double tax treaties with over 60 countries and only 12.5% corporate tax.
Question: How to become a Cyprus tax resident?
Answer: Cyprus tax residency for individuals is solely determined by the number of days each person spends in Cyprus. Any person who is in Cyprus for 183 days or more in a calendar year is considered to be a Cyprus tax resident.
Question: Who is a considered Tax resident of Cyprus (company)?
Answer: A company; the legal entity whose management and control is exercised in Cyprus. .
Question: Who is considered a Non-Domicile Cyprus Tax Resident and what are his benefits?
Answer: According to the amended relevant Cyprus Law, on July 2015 was introduced the concept of the ‘Non-domiciled’ tax residents and all benefits that comes with it. A non-domiciled Cyprus tax resident is considered the person who has a domicile origin other than Cyprus and has not been a Cyprus tax resident for at least 17 out of 20 consecutive years. According to the latest amendment; a non-domicile Cyprus tax resident will not be subject to taxes on dividends (currently on 17%), to rental income tax (currently 3%) but the biggest advantage will be subject to zero tax on bank deposit interest (30%) generated by all his worldwide deposits including Cyprus.
Question: What are the main Economic Indicators of the Cyprus economy?
Answer: 1) Positive growth in 2019 at 3.9% one of highest in the Eurozone.
2) Cyprus’ annual GDP growth is at approximately twice the EU average
3) IMF is forecasting growth rates above 3% in the next 5 years
4) Largest growth industries is construction / real estate and then tourism
5) Inflation in 2019 was 0.8%, significantly lower than the Euro Area.
6) Unemployment rate still decreases since 2013, with rate 7.1% in 2019.
7) Banking sector stabilizes – NP Loans are controlled and decreasing.
8) 2019 tourism arrivals & revenue continue to rise over 10% from 2018.
Question: What are the latest statistics and Information about the Cyprus Real Estate?
Answer: 1) In 2019 the industry is booming with 12% increase in permits issuance compared to 2017 and 2018.
2) 20% increase in the value of permits issued between 2017 and 2018.
3) Limassol is the leading city (31% of total) in valued permits, followed by Nicosia.
4) The type of building permits issued was primarily residential by 70% and non-residential (offices, shops etc.) by 17%.
5) In 2019 and since 2013 there is over 20% increase in sales contracts and 6% increase from 2018.
6) The geographical distribution of the contracts of sale in 2019 has leader the Limassol Property with 37% and second the Pafos Property with 24%, while Larnaca properties and Famagusta properties follow.
7) The contracts of sale in 2019 were submitted from non-nationals by 47% and from nationals by 53%.
8) The apartments index indicate an 8.6% year increase from 2018mto 2019 followed by Paphos and Famagusta annual increase of 5.3% and 4.9% respectively.
Question: Which type of property I have to invest in order to receive higher yields?
Answer: Cyprus residential yields for apartments and detached houses have been relatively steady. According to recent statistics in 2019 we had a yield of around 2.4% for houses and 4.5% for apartments. On the other hand the yields for commercial properties had higher volatility. Office yields for example have shown a notable increase since 2013 and in the region of 5.1%.
Question: What is the Cyprus Permanent Residency by Investment?
Answer: Cyprus Permanent Residency is an investment program in Cyprus real estate industry that is giving to applicants and their families a fast-track guarantee approval of permanent residency status within 2 months, after a minimum property investment of €300,000.
Question: What are the benefits of the Cyprus Permanent Residency Program?
Answer: The Cyprus residency program provide investors a life time residence permit into a European Union country with all benefits that comes with it. With a minimum investment of €300,000 euro, investor is required to visit Cyprus one time only and by all family members once every two years. Additionally investors and their families have the opportunity to apply for a citizenship status if they decide to reside in Cyprus for the required period of seven years and meet also all other requirements. In essence, the Cyprus Residency program can become the avenue where non Europeans can apply and become EU citizens with a low investment cost.
Question: What are the requirements for the Cyprus Residency Program?
Answer: 1) New property of minimum investment €300,000 plus VAT.
2) Three years fixed deposit of €30,000 into a Cyprus bank.
3) The €30,000 must be transferred from abroad.
4) Must provide a clean criminal record.
Question: What is mean “Cyprus Investment Program?”
Answer: Participating in the program investor with his family will obtain Cyprus passports, which is a full European citizenship; taking advantage of all privileges that have any European citizen in any EU country member state. The program requires the minimum amount of €2mln to be invested in Cyprus for 5 years. The citizenship is granted within 9 months!
Question: What are the advantages and requirements of the “Cyprus Investment Program?”
Answer: a) Granting the Cyprus passport, the Investor and his family can freely reside, work, study, and open business in Cyprus and in any other EU-member state as well as in Switzerland, Liechtenstein, Norway and Iceland.
- b) The Holder of the Cyprus passport can travel without any visa requirements in 157 countries.
- Dual-citizenship is permitted.
- The passport is issued also for the investor’s spouse*** and all financially dependent children (up to 28 years old). All next generations of investor retain EU citizenship
- The investor’s parents are entitled to apply for citizenship provided that they are owners of a Cyprus permanent residence of at least €500.000
- There is an express procedure (9 months) can be approved and receive the passport,
- Minimum investment required is €2mln investment for acquisition of residential properties (here and below amounts are excluding VAT where VAT is applicable)
- The minimum investment for investments other than residential real estate, must be €2.5 million euros, which includes buying of €500,000 residential home
- In the instance where a residential property acquired, had already been used by another investor in the CIP, the required investment amount is increased from EUR 2 million to EUR2.5 million (Effective from 15/5/2019)
- The investment must be kept for only 5 years. After this period, the assets can be sold. To be more precise, the Law states that a property of minimum value of €500.000 must be kept as a private residence
- Applicants must donate €75,000 to Cyprus research and innovation fund, also further €75,000 to Cyprus Land development agency. In total €150,000 must be donated to development of Cyprus (Effective from 15/5/2019).
- The Due diligence will do a four tier enhanced due diligence checks on all applications by appointing specialized due diligence firms.
- There is no requirement for history and language proficiency tests.
