When buying property in Cyprus there are a number of additional costs and taxes of which every buyer should be aware prior to committing to an acquisition. It is extremely important that a potential buyer plans for and takes into account each of the following incidental costs that will occur when buying property in Cyprus.
1. LEGAL FEES
It is imperative that a buyer instructs an independent lawyer to act on his behalf when buying property. The lawyer’s tasks will usually include:
- a search of the Land Registry;
- checking planning permission;
- checking building permits;
- drafting a reservation fee agreement;
- drafting and negotiating contracts of sale;
- stamping and registering the contract at the Land Registry.
Legal fees will vary according to the firm and level of experience of the lawyer instructed. The fee may be a fixed fee or charged at an hourly rate. The fee may also vary in the case of particularly complex transactions. Additional disbursements may also be charged such as the costs of relevant searches and courier charges.
2. SURVEYORS FEES
In some cases it is advisable to instruct a surveyor. As in the case of legal fees, the set rate will vary according to the individual instructed and the complexity of report required. A surveyor should be registered with ETEK (Cyprus Scientific and Technical Chamber).
Value Added Tax is payable on the purchase of all new properties except those where planning permission was granted before 1 May 2004.
VAT is charged at 17%, although there exists a reduction for EU and Cypriot first time buyers who are charged at 5%.
4. STAMP DUTY
This is payable after signature of the contract for purchase of the property. The rate of stamp duty is calculated according to the purchase price of the property:
Up to €170,860 = 0,15%
Over €170,860 = 0.2%
5. TRANSFER FEES
Transfer fees are paid upon the transfer of the property into the name of the purchaser(s). They are calculated according to the market value of the property, as determined by the Land Registry (in other words, the contract of sale will not be a decisive indicator of market value).
Transfer fees are payable in portions of the graduated scale as follows:
Up to €85,430 = 3%
€85,431 – €170,860 = 5%
Over €170,860 = 8%
It should be noted that it is beneficial to transfer the property into joint names as in this circumstance each purchaser is able to take advantage of their share of the respective portions.
Transfer fees are applied at special rates for certain transfers, for example those made between family members or from a family company to its shareholders.
There are currently new transfer fee provisions in place that will remain in effect for a limited period, until 1st June 2012. Under these limited period provisions no transfer fees will be charged on purchases where VAT has been paid and 50% transfer fees will be charged on purchases where VAT has not been paid.
6. IMMOVABLE PROPERTY TAX
This is an annual charge calculated on the property owned by an individual on 1st January every year. It is calculated according to the market value of the property on 1st January 1980 as follows:
0– €120,000 = exempt
€120,001 – €170,000 = 0.4%
€170,001- €300,000 = 0.5%
€300,001- €500,000 = 0.6%
€500,001- €800,000 = 0.7%
€800,001and above = 0.8%
If you are interested in purchasing property in Cyprus and wish to speak to one of Michael Chambers and Co. LLC’sexpert real estate lawyers then please contact us.