Home2overseasproperty, Ltd – The Independent Property Advisor

Reservation Deposit Agreement - The first step is the signing of the Reservation Deposit Agreement. This takes the property off the market for a specified period of usually one month.

Within this reservation period, the appointed lawyer will carry out required investigations at the District Land Registry to ensure that the vendor of the property is indeed the owner and ensures that the purchaser obtains good title to the property.

In Cyprus the reservation amount is usually at 1% of the property price. The reservation deposit will be “subject to contract” i.e. it is non-refundable, but it is returnable if the searches are not successful.

Searches before Exchange of Contracts:

Planning Department Search - This ensures a building permit exists and that the developer can legally build and sell to other entities.

A company search - A detailed company search demonstrates that the developer has the legal capacity to enter into contracts of sale, and that it is not been served a liquidation order.
Signing the Contract of Sale - Once all searches have been successful the next step is the signing of the Contract of Sale by both the vendor and the purchaser. This is similar to the English term, "Exchange of Contracts". Upon signing the contract of sale, the purchaser has a 6 weeks period to pay the first installment to the vendor. If the purchaser fails to do so, then the contact can become null and void.
Possession of the Property - Possession of the property will only be completed when it is actually delivered to the purchaser. At this stage the purchaser pays for all the utilities to be connected and he establishes all rights in this country, such as: residence, tax, driving, duty-free and domicile.
Transfer of Title Deeds - If the property title already exists, then both parties immediately proceed to the transfer of title deeds procedure for the new owners and pay the remaining amount owed. If the property is new, then the title will take up to three years to be issued by the official authority. In this case the remaining amount owed is repaid to the vendor with the delivery of the property. During that time, legal security to the purchaser is provided when a valid contract is signed, stamped and registered with the land registry.
Property Taxes, Fees and Rates - Real Estate transfer taxes are paid once to the Land Registry and are necessary in order to transfer freehold ownership to the name of the purchaser. The transferee is responsible for the tax payment.

Important Information

Non Cypriot citizens require permission from the Council of Ministers to purchase property in Cyprus. This normally takes about 8 to 14 months. In the meantime the purchaser can buy the property and live in it while waiting for the application to get approved.
The two certificates below should be acquired by the applicant in his country and sent as soon as possible. These two certificates will be attached to the application form:

A certificate from any person in authority in the country of the applicant certifying his good character or clean criminal record.
A certificate from any financial institution as to the applicant's good financial standing. Certificates referring to minimum deposits of 35.000 Cyp to 40.000 Cyp are preferable.

Upon the repayment by the purchaser, a permit from the Central Bank of Cyprus is required for the transfer of the purchase money. This permit is not necessary if both the purchaser and the vendor are foreigners.
All payments should be effected through official channels (banks) and money brought in cash should be declared at the airport or sea port upon arrival.
All properties in Cyprus are sold freehold.
The Cyprus legal system is largely based on Britain 's and provides many safeguards to protect the rights of the purchaser.

Northern Cyprus
To purchase a property in northern Cyprus, the process is similar to that of southern Cyprus. However, there are a number of checks carried out by the Ministry of Interior and this will inevitably mean the sale will take approximately 4-8 months to be completed. The process for buying any freehold property:

Secure property and agree the price.
Contract drawn up by solicitor, setting down the terms of sale, ie. price, time scale, vendor, purchaser and any special conditions.
Vendor and purchaser sign the contract
Purchaser provides 10-20% deposit, pending legal checks on the property.
Solicitor applies for a Purchase Permit from the Council of Ministers, (takes 4 to 8 months).
As soon as the purchase permit is received, the remaining balance remains due from purchaser.
The purchaser pays the balance and the vendor signs title deed into the name of the purchaser.
Sale is completed.

The costs involved:
Solicitors cost, including; drawing up of contract, power of attorney, purchase permit application and seeing sale through to completion = approx. £1,000

FAQ

Cyprus

Can foreign nationals own property in Cyprus?
In southern Cyprus, foreign ownership is unrestricted and the purchase procedure is as straightforward as in any other EU country.

In northern Cyprus limitations exist. Land is measured in donums. Foreign nationals cannot buy more than 1 donum of land (1,338 square metres or approximately 14,000 square feet) for one property. However this area of land will satisfy the majority of our clients. However should you wish to purchase a large piece of land, this can be easily be done by adding members of your family as the owners, or by forming a local company to buy the land in its name.

Why should I choose Cyprus?

The property market is one of the fastest growing in European Union. Prices in some areas are increasing by an annual average of 20%.
Property prices are still lower than in many other European countries, particularly in the north.
Increase in the number of golf properties available. Golf property prices fetch up to 40% more.
Comparatively low tax rate, including a Double Tax Treaty with southern Cyprus and the UK.
Capital Gains Tax of only 20% and Corporation Tax for Cypriot limited companies (through which you can own your property) at only 10%.
UK pensions can be received tax free in Cyprus.
Foreign residents permanently residing in Cyprus pay only a 5% flat rate of income tax.
340 days of sunshine a year make it a comfortable and enjoyable place to live.
High standard of living, with good facilities, including top class golf courses.
Low cost of living.
Comparatively low crime rate and friendly people.
Excellent medical facilities, education and offshore business advantages.
Tourism is predicted to grow by 4.6% over the next 10 years, contributing some 13.9% to the country´s GDP by 2014.
British based legal system, where English speaking lawyers abound.
British based banking system in southern Cyprus, making choosing mortgages and managing your money similar to “back home”.
Predicted entry to the Euro in 2007
Northern Cyprus is set to join the EU when Turkey meets the requirements.
Very efficient land registry with straightforward and well administered procedures.

What is the economic and political situation?
Since 1974, Cyprus has been divided into the government-controlled southern two thirds of the island and the remaining one third in the northern part, administered by Turkish Cypriots. This governs the economic and political situation of the island.

Shortly after founding the Republic, serious differences arose between the two communities about the implementation and interpretation of the new constitution. The Greek Cypriots argued that Turkish Cypriot interests were obstacles the efficient running of their government. Since a military coup in 1974, UN peacekeeping forces have maintained a buffer zone between the two sides. Apart from the occasional demonstration or incidents between soldiers, the island has remained completely free of violent conflict.

Today, North Cyprus will need to reach political settlement with the south and Turkey will need to resolve the North Cyprus situation in order to enter the EU.

How do we travel to Cyprus?
Travellers arriving in the Republic of Cyprus may enter the Republic only through the legal ports of entry: Larnaka and Pafos International Airports, or the ports of Larnaka, Lemesos (Limassol), and Pafos.

Border Checkpoints - As a peace measure to aid the unification of the Greek and Turkish Cypriots it was agreed that various crossings should be opened along what is known as the Green Line. The Green line is what serves as the current partition of Cyprus separating the Island into North and South Cyprus. At present there are 5 active checkpoints that can be used for crossing the Green Line in Cyprus. There are plans to open more but after the opening of the last crossing, Zohdia efforts to open new checkpoints have slowed considerably.

Airports:
Turkish North (TRNC) - Ercan is the main airport in the North and direct flights available from Turkey as well as from the UK (London, Manchester, Glasgow and Dublin). Ercan is 20 minutes drive to Nicsia (Lefkosa) and 30 minutes to Kyrenia (Girne). Connnections from Turkey are at Istanbul, Izmir, Ankara, Adana and Antalya.

Republic of Cyprus (south) - The two major international airports with direct flights to the UK are located at Larnaca and Paphos:

What is the direct flying time from UK to Cyprus?
It takes approximately 5 ½ hours to fly direct from the UK to both north and south Cyprus.

Is a visa required to enter Cyprus?
Entry requirements for UK nationals: British nationals must have a valid passport. For holders of passports endorsed British Citizen or British Overseas Territories Citizen, a visa is not required for a stay of 90 days, provided the visit is for tourist purposes only. In all other cases a visa is required, and passports must be valid at least three months beyond the period of intended stay. However, it is advisable to hold a passport valid for six months beyond period of the intended stay.

Turkish residents can visit North Cyprus, but entry to South Cyprus is prohibited to them (unless they marry a Turkish Cypriot). Entry to North Cyprus - The citizens of European Union nations, Turkey, USA, Canada, Mexico, Japan, Switzerland, Norway, Israel, Pakistan, Azerbaijan, Australia and New Zealand do not require a visa to enter the Turkish Republic of Northern Cyprus.

All other nationals should check the requirements with the nearest Turkish Republic of Northern Cyprus Embassy. Visitors have their passports stamped at the arrival checkpoints of Turkish Republic of Northern Cyprus. If you travel from North Cyprus to South Cyprus, a visa form needs to be completed and stamped at the border checkpoints. This paper visa form is loosely inserted into the passport and stamped either upon departure or arrival in North Cyprus.

Taxes

Taxes in Southern Cyprus
Real Estate Transfer Tax to transfer the freehold into the purchaser’s name. This is levied on a progressive scale starting at 5% for up to CYP10,000, increasing in five steps up to a maximum of 8% for above CYP75,000.

Immovable Property Tax for residents, based on the value of the property at a rate of 0.2% between CYP100,000 and CYP250,000; 0.3% for up to CYP500,000 and 0.35% for over CYP500,000. The first CYP100,000 is tax exempt.

Stamp duty is charged at a rate of 0.15% on the first CYP100,000, and 0.2% above this threshold.

Local authority taxes, depending on the size of the property, range from 0.1% to 0.5% per annum to cover refuse collection, sewerage, street lighting etc.

Capital gains tax charged on disposals of real property and shares in companies owning real property in Cyprus. The first CYP10,000 of a gain is tax exempt. This exemption limit rises to CYP50,000 if the seller has lived in the property continuously for the previous five years.

In certain circumstances, further allowances are granted for transfer fees, inflation and improvements made to the house, but the total exemption cannot exceed a CYP50,000 limit.

Cyprus

Taxes in North Cyprus
Main taxes involved in property purchase in Northern Cyprus:

15% VAT is charged on most new build properties and is payable at the time of transfer of title.

3% Purchase Tax is also payable upon transfer of title and it is based on the Land Registry Valuation of the property. This valuation is usually considerably less than the selling price as only bricks, mortar and size of land are taken into consideration, not fixtures and fittings.

Local council taxes of 1% of the 3% Belediye are also payable.

There is generally no Capital Gains Tax payable on a property purchase, as the vendor is usually liable to pay this, unless otherwise stipulated in your contract.

If you are selling your property, Capital Gains Tax will be calculated based upon whether you are a private individual or a professional vendor. Every individual in Northern Cyprus has a once in a lifetime tax free sale option (for a house and land not exceeding approximately 1 donum). On all subsequent sales, Capital Gains Tax will be payable at 3.5%, provided you do not sell more than 3 properties in one year, making you a professional vendor. For professional vendors, there are no tax exemption rights and Capital Gains Tax is payable on every sale at a rate of 6.25%.

Capital Gains Tax is not payable if you sell the property before taking on the title in the case of an off-plan purchase. However, you will have to pay stamp duty on the contract at 0.5% of the contract value. This amount is doubled if you pay within 2 to 6 months of signing the Contract and is tripled if you pay after this period.

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