Cyprus attracts the attention of investors due to its stable economy and favorable climate for real estate purchases. The acquisition process requires careful examination of legal aspects to ensure the security of the transaction and compliance with the law. Purchasing real estate in Cyprus is not just a financial investment but a process that requires meticulous study of legal aspects.
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Cyprus Legal System
The legal system in Cyprus is based on British law, making it understandable and predictable for many international investors. After joining the European Union, Cyprus’ legislation was aligned with EU standards, which simplifies the real estate purchasing process for EU citizens.
Property Due Diligence Before Purchase
The first and most important step in the purchasing process is legal due diligence on the property. This examination includes:
- Encumbrances Check: It is necessary to determine if there are any debts or other encumbrances on the property. This involves requesting information from the Land Registry Department and obtaining an updated search report on the property.
- Permits Verification: If the property is under construction, it is important to ensure that the developer has obtained all necessary permits and approvals.
- Zoning Check: For land plots, it is essential to clarify what type of buildings can be constructed on the plot and whether the property aligns with the intended use.
Execution and Registration of the Transaction
After completing all checks, the parties sign a sale and purchase agreement. EU citizens do not require permission to purchase property in Cyprus; they can acquire any number of properties. Non-EU citizens need to obtain approval from the Council of Ministers of Cyprus, which is a formality but crucial for the legal completion of the transaction.
The sale and purchase agreement must be registered with the Land Registry Department. Depositing the agreement provides the buyer with property ownership rights.
The sale and purchase agreement is the main document of the transaction and should clearly specify all the terms of the deal, including:
- Detailed description of the property.
- Price and payment terms.
- Deadlines for completing the transaction.
Taxes and Fees
Purchasing real estate in Cyprus involves paying various taxes and fees, such as:
- Stamp Duty: Paid by the buyer and depends on the property’s value. More details are available in our article.
- Transfer Fee: Ranges from 1.5% to 4% and is paid by the buyer.
- VAT: A 19% VAT is applied to new properties. Resale properties are exempt from VAT. First-time buyers purchasing a new home for permanent residence in Cyprus may apply for a reduced VAT rate of 5%. There are certain conditions due to changes in the program.
Title Deed Acquisition
The final stage of purchasing real estate in Cyprus is obtaining the title deed. After signing the sale and purchase agreement, an application must be submitted to the Cyprus Land Registry Department. The application should be accompanied by:
- A copy of the sale and purchase agreement.
- The Council of Ministers’ permission for purchase (if the buyer is a foreigner).
- Proof of payment for all taxes and fees associated with the purchase.
After completing all procedures and paying the necessary fees, the Land Registry Department issues the title deed in the name of the new owner. This document serves as official confirmation of ownership and concludes the purchasing process. It is worth noting that new properties do not have a title deed immediately; it may take 1-3 years after the completion of construction to receive it. Until the title deed is issued, the main document confirming ownership is the sale and purchase agreement, certified by the Land Registry Department.
Purchasing real estate in Cyprus is a complex process that requires thorough legal support. Our company collaborates with an experienced licensed lawyer who will assist you at every stage of the transaction and ensure the protection of your interests. Your transaction will be conducted safely and in full compliance with all the requirements of Cypriot law.
