Buying Facts
When you buy property in Cyprus the following costs will apply:
Deposit
An initial deposit of £1k/2k will secure a property, this deposit forms a legally binding contract and guarantees that you will not be gazumped. It is also non-refundable. On exchanging contracts you will need to pay 20-30% of the price, and the remainder either on completion or in agreed tranches. The usual checks with the land registry and to establish if there are outstanding loans against the property are necessary, and officially, permission to buy must be sought in writing from the Council of Ministers (done by your Lawyer)
As with any other overseas property purchase, it is important to take independent legal advice, but this is particularly true if you are tempted to consider buying in the north of the island, where disputes over land ownership following the Turkish occupation in 1974 have in some cases left British buyers with investments that are at best worthless and at worst, in danger of losing their UK home.
The moral is use a good Lawyer and be sure before you sign!
Stamp Duty - This is levied at two rates:
0.15% for contracts up to £100,000 value
0.2% for contracts over £100,000 value
Stamp Duty is payable by the Purchaser within 30 days of signing the contract.
Property Deeds - Transfer Fees
The costs of transferring Property deeds to the Purchaser are:
| Property Value | Transfer Fee |
| Up to £50,000 | 3% |
| £50,000 - £100,000 | 5% |
| Over £100,000 | 8% |
Therefore, for a property with a value of £150,000, the transfer fee calculation is:
| Property Value | Transfer Fee |
| The first £50,000 @ 3% | £1,500 |
| The next £50,000 @ 5% | £2,500 |
| The balance of £50,000 @ 8% | £4,000 |
| £8,000 Total Fee |
There is however a saving to be made by purchasing the property in joint names, whereby the value of the property is split equally between both names and the fees are charged against each individual’s stake in the property. So, if the property has a value of £150,000, the fee calculation runs as follows:
| Property Value | Purchaser 1 | Purchaser 2 | Combined Transfer Fee |
| First £50,000 @ 3% | 1,500 | 1,500 | 3,000 |
| Next £25,000 @ 5% | 1,250 | 1,250 | 2,500 |
| 5,500 Total Fee |
Doing it this way saves £2,500!
With new properties it can take several years before deeds are issued and Cypriot banks who loan you money to purchase a property will levy charges until the deeds are issued to you. This is their method of protecting their investment, until you are the legal owner of the property.
PROPERTY TAX
You will be liable to pay an annual property tax which is based on the value of the property and calculated as follows:
| Property Value | Annual Tax Percentage | £’s Per £1,000 | Annual Tax |
| Up to £100,000 | 0 | 0 | 0 |
| £100,000 - £150,000 | 0.25 | 2.5 | 375 |
| £250,000 - £500,000 | 0.35 | 3.5 | 1,250 |
| Over £500,000 | 0.40 | 4.0 |
VAT
In-line with EU taxation rules, property sales are subject to VAT at the following rates:
First Time Buyers pay 5% VAT
All other Buyers pay 15% VAT
CAPITAL GAINS TAX
Capital gains tax is charged at the rate of 20% on gains arising from the disposal of immovable property in Cyprus or the disposal of shares of companies which own immovable property in Cyprus. Gains from the sale of shares listed on the stock exchange are excluded from capital gains tax.
For the individual, Capital Gains Tax paid can be minimised for the following reasons:
The cost of acquisition used for the calculation of the profit also includes any payments made for the improvement of the property or for any additions on the property as well as any interest paid for the acquisition.
The acquisition cost used for the calculation of the profit is adjusted to take into account the inflation rate.
The following lifetime allowances are given to individuals:
- Net capital gains up to £10.000 earned from the disposal of any property are tax exempt.
- Net capital gains up to £50.000 earned from the disposal of a family residence (subject to certain conditions) are tax exempt.
- The above allowances are not available separately. An individual claiming a combination of the above allowances in only allowed a maximum allowance of £50.000.