Buying property in Cyprus: A step-by-step guide (+ tax information)

Cyprus is an open real estate market and demand has been growing for property in the country since 2016. The warm Mediterranean climate, relatively low residential property prices, and opportunity to obtain residency/nationality through investment (when buying property worth at least €300,000/€2M respectively) are all attractive to potential buyers. 

Tranio highly recommends looking into the nuances of buying property in advance to avoid problems during registration.

Registration and purchase rights

All real estate transactions are registered as dictated by the Immovable Property (Tenure, Registration, and Valuation) Law Cap 224.

European Economic Area (EEA) nationals who reside permanently in Cyprus, together with legal entities with headquarters registered on the island, can buy real estate without restrictions.

Certain terms exist for nationals of EEA member countries:

— the maximum size of a property or land plot for development is 4,014 m²;

— the purchase of a second home may be allowed depending on the type of use – for example, a holiday home in addition to a permanent residence.

Even with these restrictions, foreigners generally find it easy to buy property in Cyprus. 

When buying real estate in Cyprus, foreigners can take out a loan under the programme designed specifically for non-residents.

Buying property: 8 steps

1. Choosing a location. The most popular cities in the south of Cyprus are Limassol, Paphos, and Larnaca. You’ll find more details about property prices in these cities in this article.

2. Putting down a deposit to take a property off the market. There’s no fixed deposit amount because the buyer and seller negotiate a figure themselves. However, it usually works out at 1% of the price, but not less than €3,000.

3. Reserving the property and signing a transaction support agreement with a Cypriot lawyer. A property can be reserved for a period agreed upon by the buyer and seller, during which a lawyer must prepare the relevant documents. It’s not obligatory for the buyer to take part in this stage of the purchase.

A lawyer submits the required application form (№270) to the Land Registry and attaches:

• a copy of the property purchase permit from the Cyprus Council of Ministers;
• a property registration certificate;
• an up-to-date proof of payment of all taxes: municipal taxes, sewage tax, local authorities’ taxes;
• a sales stamped contract;
• confirmation by the Bank of Cyprus of the purchase being made with foreign funds;

4. Making a down payment amounting to at least 20% of the property value and signing the sales agreement. There are no fixed limits, they are negotiated at the time of reservation.

5. Paying the necessary taxes and fees. They include stamp duty, the broker's fee, etc.

6. The lawyer drafting the application for the property purchase permit. The document is submitted to the Cyprus Council of Ministers – permission is needed to buy real estate, except for land plots. Approval may take up to three months to be obtained.

7. Paying the remaining purchase amount upon obtaining all the permits. The buyer will then receive the keys to their new home.

8. Obtaining the title deed, which is issued by the Cyprus Land Committee.

Taxes and fees

All fees are paid by the buyer. When registering a transaction, the buyer has to pay the stamp and title fees, VAT (most of the time), plus legal and realtor fees.

Stamp duty

This is paid within 30 days after signing the sales agreement and the rate depends on the property price. The stamp duty rate is 0.15% of the first €170,860 of the property price and 0.2% of the remaining amount. Registration must take place no later than two months after signing the agreement.

Transfer tax

Also known as the title fee, it’s levied by the Cyprus Department of Lands and Surveys for the transfer of ownership.

The rate depends on the property price. For example, if a property is worth €100,000, the rate will be 3% of the first €85,000 and 5% on the remaining €15,000. The title fee can be reduced when registering a property to several individuals. For example, if a house is worth €150,000, the title fee would be 3.87% or €5,800: €2,550 on €85,000 and €3,250 on the remaining €65,000.

If the buyer registers the property to two people, each would pay €75,000, with the title fee amounting to 3% for each in this case. This is a legal way to save money on taxes when buying real estate in Cyprus. Saving money is possible because in the case of joint ownership the tax base is calculated according to the value of the property share belonging to each of the owners. Moreover, the title fee does not apply when charging VAT.

VAT

VAT does not apply to the sales transactions involving real estate that will not be used for commercial purposes.

To lease purchases, a 19% VAT applies, but it can be reduced. The reduced rate applies to residential property under 200 m². If the property is larger, for instance, 350 m², the buyer pays 5% on the first 200 m² and 19% on the remaining 150 m². To obtain a permit to pay reduced VAT, it is necessary to apply to the Tax Department.

The reduced 5% rate only applies to agreements signed after 1 October 2011. In this case, the buyer will have to permanently reside in the purchased house or apartment for the next 10 years.

Taxes after the purchase

The list of taxes and fees to be paid after purchase:

• garbage removal, street lighting, and other utility fees — from €85 to €300 depending on the property size;
• annual municipal tax at a rate of 0.015–0.025% of the property’s value as of January 2013. It is paid to the local municipal authority;
• sewerage tax at a rate of 0.05–0.065% of the property’s value as of January 2013.

Property tax was cancelled from 2017.