Cyprus Fact-File Part 7:
Individual Business Owner Welfare and Lifestyle
7.8 Cyprus Domestic Real Estate
Domestic real estate and its tax treatment
Cypriot nationals and EU citizens who
have a permanent residence in Cyprus may purchase real estate
in Cyprus without any restrictions. Non-residents and non-EU
citizens are required to comply with certain conditions if
they wish to acquire real estate: there is a restriction on
the size and type of the property that can be acquired. Foreigners
have traditionally been required to obtain the permission
of the Council of Ministers before they can buy a property,
although this requirement has been relaxed somewhat with regard
to EU residents.
The house purchase process is similar to that of the UK.
However, where an offer on a property is made and accepted
it is legally binding, unlike in the UK. Therefore - in theory
at least - gazumping does not exist in Cyprus!
Property owners must pay an Immovable Property Tax each year,
calculated on 1st January each year and payable by 30th September
of that year. This tax is calculated on the market value of
the property (as of January 1980, where possible) . There
are some exemptions from the tax, including schools, hospitals,
churches, consular buildings and properties occupied by citizens
of Turkey.
There is no tax for properties valued up to EUR170,860; up
to EUR427,150 the rate is 2.5%; up to EUR854,300 the rate
is 3.5%; and over that the rate is 4%.
However, the government announced in April 2010 that it would
be reviewing the taxation of real estate over the following
three to five year period.
Transfer fees are imposed on the transfer (or sale) of immovable
property situated in Cyprus. The rates range from 3% to 8%
depending on the value of the property, the higher rates are
paid on properties with a market value in excess of EUR170,860.
A capital gains tax is also imposed on either the difference
between the sale price and the original property price, or,
if the property was purchased before January 1980, on the
sale price and the market value at that time. The first EUR17,086
is exempt, with the remainder taxed at 20%.
Stamp duty is due at the rate of 0.15% of the value of the
property up to a threshold of EUR170,860, and 0.20% for properties
valued over that amount. Stamp duty is usually paid by the
purchaser, unless agreed otherwise in writing.
It is also possible (although not advisable) to purchase
property in the Turkish-occupied northern section of the island.
Although there are certainly bargains to be had, the Turkish
Republic of Northern Cyprus is currently only legally recognised
by Turkey, meaning that the legal position of title deeds
issued in the TRNC over the last three decades is dubious;
since border restrictions were lifted and Greek Cypriots have
been allowed to cross the demarcation line, many have visited
land or homes lost after the Turkish invasion, and if a settlement
is ever reached between the two sides, claims for restitution
or compensation are likely to be lodged against any new ‘owners’.
Rules regarding the construction of property in Cyprus vary
according to whether the applicant is from another EU country
or not.
EU nationals who are permanent residents in Cyprus are permitted
to purchase as much property as they require, and do not need
to obtain the government’s permission via the Council of Ministers.
EU nationals who are not permanent residents of Cyprus can
buy land as required, but must obtain permission from the
Council of Ministers (which is nearly always granted, but
can take between 6-12 months to come through), and are restricted
to one house or apartment.
Non-EU nationals are restricted to purchasing one apartment,
house, or building plot of not more than 4,000 square metres,
and must seek approval from the Council of Ministers.
Cyprus is divided into various planning zones (including
residential, industrial, agricultural, tourist, green belt,
etc), and the appropriate zone for the purpose must be selected;
alternatively, a designated building plot, which will generally
have access to utilities and a right of way already established,
may be purchased.
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