Purchase Property in Cyprus
The island is known as the Republic of Cyprus and is split into two parts – 59% of the island is under control of the Republic of Cyprus, the rest being under the control of Turkey and known as the Turkish Republic of Northern Cyprus (however this is not recognized outside of Turkey).
Cyprus is the third largest island in the Mediterranean behind Sicily and Sardinia, has the warmest climate with average temperatures during the day at 24C and 14C at night and has been part of the Euro Currency since 2008. It has two international airports located in Larnaca and Paphos.
When you find a property for sale in Cyprus you would normally put a small deposit, around 1% to 2% of the purchase price as a ‘holding deposit’ whilst the contracts are drawn up and is a legally binding deposit. Once the contracts are signed a 10% deposit is paid on resale property and 20-30% on new builds. The balance is then payable on completion.
During the process you will need to submit the contracts to the land registry along with an application for ‘Approval to Transfer’ which can take a little while to get and you may find you have completed and moved in before you actually receive it but this is not out of the norm. You will need to submit references and the bank would be one of these.
The costs involved in purchasing a property in Cyprus can be quite complicated and there are two fees, Stamp Duty and Property Transfer Tax, thereafter known as the Immovable Property Tax which is paid annually.
Stamp Duty: This is charged at 0.15% on the first €170,860 and then at 0.2% for anything over that so for a property of €300,000 you would pay (1.5% of €170,860 = €256) + (0.2% of €300,000 – €170,860 = €129140 = €258.28) Total stamp duty payable = €514.28.
Property Transfer Tax/Immovable Property Tax: The tax rates are changing from January 1st 2012 and until that date the fees are up to € 85,430 = 3%, from € 85,431 to € 170,860 = 5%, from € 170,861 and over 8%. You can take advantage of being a married couple and you can buy in joint names this will split the price of a property in half for joint ownership and will reduce your tax liability.
From January 2012 the immovable property Tax will be changing and the revised figures are shown below, also the property value will be reassessed and as current property values are based on 1980 then it is expected that these will go up.
Property value as at January 1, 1980
- Up to 120.000 euros: 0%
- 120.000 – 170.000: 0.4%
- 170.000 – 300.000: 0.5%
- 300.000 – 500.000: 0.6%
- 500.000 – 800.000: 0.7%
- Over 800.000 euros: 0.8%
Mortgages are available and proof of income is required, mortgages are worked out on your income and expenditure, so all your other mortgages/rent/loans etc. are taken into consideration. If you receive income from other properties then you can put this towards your income although there is no guarantee it will be taken into account. The maximum LTV (Loan to Value) is 70% although in some circumstances especially for first time buyers it can be 80%. If you are looking for a mortgage in Northern Cyprus then currently it is only being arranged for pre-1974 Turkish owned or foreign titled property, maximum LTV is 65%.
Location, Location, Location, everyone asks where is the best place to buy, well Paphos, Limassol and Larnaca are firm favorites, of course it depends why you are buying, a holiday home or permanent residence either way we would recommend that you take your time and visit regularly until you find the best location for yourself and your family.
Property for sale in North Cyprus:
People should be very cautious when buy buying property in the Turkish Republic of Northern Cyprus, there is still a very real legal issue over ownership and this is not to say that all properties are affected but ensure you check and double check everything, if possible look for Pre 1974 Turkish owned or foreign titled property although these are harder to find these days.
