Larnaca has quickly become the island’s most attractive destination for real estate investors. Our team of real estate experts lets you know all you need to know about buying immovable property in Cyprus.
MARINA AND PORT PROJECT
The long-awaited €1.2 billion redevelopment of the Larnaca port and marina, will rejuvenate the city of Larnaca and will be the largest infrastructure project since the construction of the new Larnaca International Airport.
The project will play a formidable role in promoting Larnaca as one of the Mediterranean’s most up and coming tourist destinations.
The project envisages the expansion of the current marina to 650 berths, the infrastructure to accommodate large vessels, the expansion of the current pier, docks and the development of a sizeable passenger terminal for tourist cruise liners. In addition, the plans include the construction of a yacht club and retail park, along with a number of luxury hotels, a private island and residential property.
The spin-off from the project will result in Larnaca growing its footprint as a business hub in Cyprus, with the increase of office space and with international companies choosing to relocate to Larnaca to take advantage of the island’s favourable tax regime. Furthermore, the city’s overall tourist product will undertake a great revitalization through an influx of foreign and local investment.
BUYING IN CYPRUS
When buying real estate in Cyprus, an investor will need to consider various factors before and after purchasing the property.
Despite Real Estate Agencies and Property Developers advising Buyers not to seek the consultation of lawyers, it is highly recommended to seek professional legal advice when purchasing real estate in Cyprus as the repercussions of a one-sided agreement favouring the Seller can result in unrecoverable losses for the Buyer.
Our specialized ream of lawyers are legally obliged as professionals to undertake the appropriate due diligence on the prospective property and all the appropriate checks to ensure the property is ‘clean’ with no possible dangers, in order for you to enjoy the full and unequivocal rights of your future property.
Our specialized team of lawyers shall:
- verify the Seller’s ownership of the property.
- carry out an official search at the Land Registry to confirm if there are any encumbrances or charges registered over the property.
- ensure the availability of all necessary permits, where required.
- verify the financial standing and viability of the Seller.
- provide an evaluation of the Seller’s reputation in the Cyprus real estate market.
- assist in appointing qualified engineers or surveyors to carry out structural or other surveys, where required.
- draft and execute the contract of sale between both parties with the contract’s provisions negotiated in a fair and balanced way with all formalities complying to all law and regulations applicable in Cyprus.
- handle all matters related with the Cyprus Tax Authorities, where required.
- execute an application for permission made to District Office in accordance to the Acquisition of Immovable Property (Aliens) Law Cap. 109 for purchase by non-EU nationals. Note: It takes about 15-30 days for the permission to be issued.
- submit and register the contract of sale with the Land Registry Office preventing the Seller from transferring the property elsewhere or registering an encumbrance before finalizing the transfer. Note: This is valid as long as the contract is valid and legally effective.
- assist in handling the payment of stamp duty and transfer fees related to the property.
- authorised representative of the Buyer through Power of Attorney, from start to finish until the Property is transferred to the Buyer.
A title deed is a formal document issued by the Land Registry Office which legally confirms the ownership of a property. Once transfer is made at the Land Registry, the title deed will be registered on the Buyer’s name.
When no title deeds are issued yet, this means, most likely immovable property purchased is off-plan or still under development.
There are situations where Buyers purchase a property without a title deed, however, appropriate due diligence must be undertaken to assess the reasons why the title deed has not been issued.
Sale Agreements must be fully stamped by governmental authorities within 30 days of its signing.
Rates are as follows:
€0 – €5,000: 0%
€5,001 – €170,860: 0.15%
€170,861 – €8,543,000: 0.20%
Over €8.543.000: €17.086
Transfer fees are payable to the Land Registry Office and are calculated on the market value of the property on the date of the transfer. Once the transfer fees are paid, the transfer to the Buyer is finalised.
It’s good to point out that a sole Buyer will pay more transfer fees, so it is custom for Buyers to add family members to the title deed.
- A minor named on a title deed requires a Court Order to sell it before reaching 18 years old.
- No Transfer fees are payable, if the property is subject to VAT (19%)
- Transfer fees are reduced by 50% if the property was not subject to VAT.
- 0% Transfer fees are payable if property is transferred from company to company
Transfer fee rates:
Up to €85 000 of the property value - 3%
From €85 001 to €170 000 of the property value - 5%
From €170 001 of the property value - 8%.
One Buyer buys a house for €400 000:
Transfer fees will be:
€85 000 x 3% + €85 000 x 5% + €230 000 x 8% = €25 200*
Transfer fees for Buyer: €12 600* (where 50% reduction applies)
Three Buyers buy a house for €400 000:
Transfer fees will be:
€85 000 x 3% x 3 persons + €145.000 x 5% = €14,900*
Transfer fees for Buyer: €7,450* (where 50% reduction applies)
OTHER FEES TO CONSIDER
VAT Payable on Property
A VAT rate of 19% is required to be paid when buying a new property.
A reduced VAT rate starting from 5%, is applicable for the acquisition of new residential properties when certain terms and conditions are met:
- The property must be used as the primary and permanent residence of the applicant for the next 10 years.
- The applicant has not acquired any other residence in Cyprus with a reduced VAT rate.
- The applicant must be an individual, over 18 years old, thus legal entities are excluded.
Note: The reduced VAT rate of 5% is applied on the first 200 square meters of the property as per the architectural plans submitted to the Authorities. On the remaining square meters, the standard rate of 19% is imposed.
The registered owner of the property is required to pay an annual Municipality Tax, calculated on the market value of the property as at 1st of January 2018. The rates vary from 1% – 2% Municipality tax is payable to the local municipal authority, where the property is located.
Other Fees (Local Authorities)
Depending on the size of the property, local authorities charge between €85 – €500 yearly for garbage collection, sewerage and other community services.
Panayiotis Z. Toulouras LLC provides clients legal advice on commercial and residential property.
Our areas of work include:
- Negotiation and drafting of contracts
- Sales and Purchase of property
- Authorised Representation
- Market Evaluation
- Long term and short-term leases
- Property management for non-residents.
- Licensing and Permits
- Due diligence reports
- Real estate transaction and tax issues