Purchasing real estate in Cyprus is an attractive opportunity for both investors and those seeking a place for vacation or permanent residence in a Mediterranean country. For foreign citizens, acquiring property in Cyprus requires compliance with a number of legal formalities, including obtaining special permission to purchase property from the Council of Ministers.
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How to Obtain Permission to Purchase Property?
To acquire real estate in Cyprus, citizens of non-European Union countries must obtain purchase permission from the Council of Ministers.
Main Steps:
After selecting a property, the buyer and seller sign a reservation agreement, which may include terms for reserving the property. Typically, along with the agreement, the buyer pays a deposit to confirm their intentions.
After preparing the documents and signing the main purchase agreement, the applicant must submit an application to the Council of Ministers. The review process takes some time. However, the buyer can take possession of the property without waiting for the decision. Obtaining the permission is a relatively formal procedure but is required by Cyprus’s bureaucratic system.
Taxes and Fees
Once you receive permission to purchase property in Cyprus, you need to consider various taxes and fees associated with the transaction. These costs should be factored into the overall purchase budget to avoid unexpected expenses.
Key types of taxes and fees:
- Stamp Duty: This mandatory fee must be paid within 30 days after signing the main purchase agreement. The amount depends on the property’s value: 0.15% on the amount up to €170,860 and 0.2% on the remaining value.
- Transfer Fee: This tax is paid when registering the property in the new owner’s name with the Land Registry Department. The rate varies from 1.5% to 4%, depending on the property’s value.
- Value Added Tax (VAT): VAT applies to the purchase of new property. The standard rate is 19%, but for residential properties up to 200 square meters, a reduced rate of 5% may apply.
- Legal and Administrative Expenses: These include the services of lawyers who oversee the transaction, as well as various registration fees and costs for processing documents with official bodies.
Important Considerations
- Property Size: Foreign buyers who are not EU citizens can purchase no more than one residential property up to 4,014 square meters.
- Due Diligence: It is crucial to conduct a legal check on the property before purchasing to avoid potential issues with ownership rights or encumbrances.
Importance of Legal Support
Given the numerous legal and financial aspects associated with purchasing property in Cyprus, it is highly recommended to seek the services of an experienced lawyer. A specialist will help conduct all necessary checks, protect your interests when signing contracts, and ensure compliance with all local requirements.
Purchasing real estate in Cyprus is a significant decision that requires a careful approach and thorough preparation. However, by following all legal formalities and obtaining qualified support, you can successfully complete the transaction and enjoy all the benefits of owning property on this beautiful island.
Buying real estate in Cyprus is a complex process that requires meticulous legal support. Our company works with an experienced licensed lawyer who will assist with the transaction at all stages and ensure your interests are protected. Your transaction will be conducted safely and in full compliance with Cypriot law.
