A Basic Guide to Purchasing a Property in the Republic of Cyprus
Price
The price you pay is fixed at the time that you pay a reserve deposit to hold the property. But please check with the developer what is to be included in your sale agreement, as often air-conditioning provision is included but not the actual air conditioning units.
Immediate funds needed
To secure your chosen property – fix the price and take it off the market, you will be required to pay a reserve deposit which is normally non refundable. This will be in the region of 3,500 Euros to 8,500 Euros depending upon the purchase price of the property and the developer. You will be expected to pay the reservation fee immediately you decide you want the property – with some developers this can be paid by credit card.
Within 4 to 6 weeks of paying the reservation fee you will be required to pay the balance of around 30% of the property price as a deposit. It is at this stage that you or your solicitor will exchange contracts and your sales agreement is logged with the Land registry and the property becomes yours through the letter of specific performance.
Title Deeds
All completed properties will be subject to a transfer of title deeds to you as the owner of the property once the property is completed and the purchase price has been paid to the developer, builder, or vendor if it is a re-sale property.
When purchasing off plan – at the time of purchasing off plan and up until completion of the project, the only title that will be evident is the overall title for the land on which the project is being built – whatever type of property / development that may being built.
Upon completion of the project, the developer will make an application to the government offices for individual title deeds for each individual property. This can take anything from 2 to 6 years to come through (sometimes longer) due to the process. This something the developers have no control over, however the government is working to reduce this time.
Protecting the purchase of your property until you get the title deeds is quite straight forward and something any good Lawyer will do for you. Your lawyer will register your sales contract with the Land Registry Office local to where you make your purchase. The sales agreement will be filed with the land registry and you will gain a letter of specific performance that gives you an absolute right over the land and the property being built until such time that you receive the actual title deeds.
The specific sales performance means that the developer can on longer include that land and property in their portfolio of assets. It also means that no one can take a loan out using the land as collateral and no one can sell the land to anyone else.
Transfer Tax
At the time the title deeds for your property are made available your lawyer under your instructions will transfer them into your names. At this moment you will have to pay the transfer tax.
The transfer tax fees are as follows:
3% of the purchase price up to the first 85,430 Euros
5% of the purchase price from 85,431 Euros to 170,860 Euros
8% of the purchase price from 170,861 Euros and above
Remember that this will become due upon the transfer of the individual title deeds into your name and that this can take two years or more after you take delivery of your property.
It is also advantageous if you register the property in joint names where applicable. This will then mean that the overall purchase price will be split to both parties and so less tax is applicable overall.
Other Taxes
Immovable property taxes are paid annually and apply to properties that are valued at over 170,860 Euros – currently this is applied to valuations based on 1980 prices.
Refuse Tax is also payable per annually and is dependant upon the municipal area your property is located in, the tax is usually between 154 Euros and 205 Euros.
V.A.T
Value added tax is to be applied to new property purchases in Cyprus. This was implemented when Cyprus joined the European Union in May 2004.
If you are purchasing a property where the planning application was applied for prior to May 2004 then VAT is not applicable so please check with your agent or developer.
Freehold/leasehold
Most properties in Cyprus are available freehold – even apartments are purchased as freehold. The purchaser actually owns the land the apartment is built on in conjunction with any other owners of apartments that are situated on the same plot of land. The freehold includes all of the land indicated on the plans as part of any sales contract.
Roads/pathways
In Cyprus the developers have the responsibility to undertake to build the roadways to the properties – this may be an access road from the main roadway or a private road access to the project. When a purchase is made, you can expect the roadway to be completed as part of the sale, you will not be expected to pay extra to have the roadway made. The finish of the roadways will vary, mainly it is tarmac but please check on each purchase with the developer as to the finish of the road. Pathways will normally form part of the project where that project includes any communal gardens and grounds. When an individual or custom built villa is purchased any pathway that forms part of the sale will be completed as per the specification in the sale contract. Other pathways may be included on site plans as providing access to other villas.
Note: This information is written as a guide only and you should check with the developer and your solicitor at the time of purchase if you have any questions.
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