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The process of buying property in Cyprus

23.07.2021
Author: Dinara Gracheva
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Cyprus is one of the most popular countries in the world where foreigners have been purchasing real estate over the past years; read about all stages of home buying in this country in our material.

Why foreigners choose Cyprus

The climate and good ecology are significant factors that influence the choice of overseas property buyers in favor of Cyprus. The winters are very mild here - the average daytime temperature is 17 degrees, the water in the sea does not drop below 16 degrees, respectively, and the season in the country is very long - perhaps, no other EU country has such a thing anymore. Private English and Russian schools provide quality education and it is really not very expensive. Cyprus has two international airports, from which you can get to anywhere on the island in a maximum of an hour and a half, thanks to the developed network of excellent highways. Throughout the year, there is always fresh local fruits and vegetables, because the harvest is harvested 2-3 times a year. As for real estate, two important factors work in Cyprus's favor - the absence of an annual property tax and the ability to obtain a residence permit if the value of the object exceeds 300,000 euros.

Buy property in Cyprus

Object selection

When choosing an object in the primary real estate market in Cyprus, it is necessary to clearly trace whether the terms of delivery of the object are spelled out in the contract (if the house is still under construction or is at the project stage) and whether there are penalties for non-fulfillment of these obligations. The lawyer accompanying the transaction must check with the developer that they have all the necessary licenses for the construction of this facility and credit encumbrances. And if there are any, then you need to obtain from the bank the relevant documents that this property will be withdrawn from the pledge at the time of receipt of the certificate of ownership of the object.

When buying a home on the secondary real estate market, the first thing you should pay attention to is the presence of a title page, that is, the final certificate of ownership. If more than three to four years have passed since the delivery of the house, and the title page has not been received, then violations were recorded during the construction of this project (or there are credit encumbrances from the developer, if the object is purchased through it). Accordingly, such a purchase must be approached with extreme caution. There are also cases when the buyer does not issue a title page simply because he wants to avoid paying tax.

Deal execution process

When the transaction begins, the algorithm of actions will be almost the same regardless of whether the object belongs to primary or secondary real estate. The first step is to make a deposit, after which this house or apartment (there are no differences when buying different types of objects) is removed from the sale. Typically, the reservation fee is between 1000 and 10,000 euros - an appropriate confirmation document must be issued. The paid amount of this contribution is included in the purchase price of the property. The real estate is reserved for the buyer, as a rule, for a period of one to two months.

Buy property in Cyprus

During this period, the lawyer checks the documentation for the object and organizes the release of real estate from pledges and encumbrances (if any). Also, the lawyer prepares a purchase and sale agreement, coordinating it with all parties to the transaction. The difference in it may be as follows: the document prescribes the schedule of payments and the terms of acceptance of the house if the house has not yet been commissioned, if it is a secondary property, then the keys to the house after completing payments can be obtained from a lawyer or from an agent through whom this object was found.

After receiving information from the lawyer about the readiness of the documents and the sale and purchase agreement, the buyer agrees with him the date of signing the agreement - this procedure can be carried out directly in Cyprus or remotely by sending the documents signed on his part to Cyprus by express mail. Then the future owner makes payments according to the terms specified in the contract.

Further, the lawyer, if necessary, prepares an application for obtaining permission from the Council of Ministers of Cyprus for the purchase of the first real estate by the buyer. This procedure is just a formality, since the Council of Ministers verifies that the investor has no problems with the law (his name should not appear on the Interpol lists) and the acquired housing is the first (for citizens of non-EU countries).

Home purchase expenses

When buying a secondary property, the biggest expense, in addition to the cost of the property itself, is the payment of the transfer fee (Transfer Fee) - up to 85,000 is 3% of the transaction amount, over 85,000 and up to 170,000 5% of the transaction amount, and for anything over 170 000 8% of the transaction amount. But now there is a 50% discount in Cyprus, so all these costs are halved. For example, for a resale property worth 500,000 euros, the Transfer Fee will be 16,600 euros.

Buy property in Cyprus

Also, expenses must include the cost of paying for the services of a lawyer accompanying the transaction - this is, as a rule, 0.5-1% of the transaction amount. The buyer enters into an agreement with a Cypriot lawyer for legal support of the sale and purchase transaction and issues him all the necessary powers of attorney. An important point: the participation of a lawyer is necessary when buying real estate on the secondary market. When buying real estate from a developer, the services of a lawyer are provided directly by the developer, or the buyer, if desired, can use the services of an independent lawyer.

After the buyer makes the first payment specified in the contract (as a rule, such a payment is 30-40% of the value of the purchased property), the lawyer, on behalf of the buyer, together with the representative of the developer (or the owner of the secondary real estate), pays the stamp duty (Stamp Duty), registration agreement with the Land District Office in the name of the buyer.

When buying a primary property in Cyprus, you must pay VAT - if you buy the first property in Cyprus, the tax will be 5%, if not, then you will need to pay 19% of the value of the property. The preferential rate can be saved when purchasing another property in Cyprus from a developer, provided that the previous property was purchased more than 10 years ago. After paying VAT, the buyer pays the remainder of the property value in accordance with the terms and conditions specified in the sales contract.

The buyer then takes over the ownership of his property and gets the keys in hand. After the completed object is put into operation (in the case of buying a home from a developer), the Land District Office issues a Title Deed. In the case of buying real estate on the secondary market, having received this document (Title Deed), the buyer pays the transfer fee (Transfer Fee) and becomes the registered owner of the property.

Buy property in Cyprus

Rights and obligations of a property owner in Cyprus

If the owner is not a citizen of the European Union, then after purchasing real estate, he can receive a residence permit, which allows him to stay permanently in the country. If the object belongs to new buildings and the purchase price exceeds 300,000 euros, then you can quickly get permanent residence, if the purchase amount is less and this is a secondary property, then the residence permit will be renewed annually.

It is important for the owner of Cyprus real estate to pay utility bills on time, not to change the facade of the house (if it is a residential complex) and follow the rules for using the common areas of the complex.

Thank you for your help in preparing the material:

Yannis Iliadis, Manager of Foutina

Sergey Smolensky, CEO of Empire Property Cyprus

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Discussion
Claudia Petrun
My husband and I would like to live in Cyprus, because we are very tired of living in dampness in Lithuania, we have a lot of dampness, hence all the diseases, I have such a question if we decide to come to you, we can wait for help with registration and how much money is needed to buy an apartment if we wanted a 2-room apartment, but you can also have a one-room one just not like this scary as shown
29 of Aug 2022, 15:20:38
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Ludmila
Good afternoon. When buying a property worth 38,000 pounds, what amount will still need to be paid
14 of May 2022, 08:18:31
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