Acquisition of Immovable Property by Non-Residents

Cyprus is a popular place for the acquisition by foreigners of holiday houses. The popularity is attributed to many factors, like low cost of living and its high standards, the hospitality of the local population, the pleasant climate enjoying 300 days of sunshine the year round and the sense of security.

According to the Acquisition of Immovable Property (Aliens) (Amendment) Law 54(I) of 2003 which came into force on  01/05/2004,  European Union Nationals or legal bodies do not require the permission of the District Officer to acquire immovable property in Cyprus any longer. All previous restrictions regarding the size, the type, the use of the immovable property and that the cost to be paid must be in foreign currency are abolished.

The situation is now as follows:

• European nationals do not need a permit to own any kind of immovable property in Cyprus.
• Cyprus companies whose shareholders are European nationals do not need a permit to own any kind of immovable property in Cyprus. 
• Companies registered in any E.U. country do not need a permit to own land in Cyprus but they need a permit to own a house or apartment.

As regards non European Union Nationals, the Acquisition of Immovable Property (Aliens) Law Cap. 109, has not been amended and the same provisions continue to apply, as follows:

Restrictions

Foreigners are given permission to acquire one of the following:

• apartment
• house
• building site or land up to approximately three donums (4,014 square meters)

A company owned by foreigners may also acquire premises for their business offices plus residence of their foreign employees provided they maintain a fully fledged office.  Also a non-EU national may be allowed to buy a house and a shop provided that the shop will be solely used for business trading.

In certain cases, it is possible that the District Officer will grant approval for the acquisition by a foreigner of a larger area of land, if the land is to be used for touristic development (e.g. Hotel or Hotel Complex), especially if the intended project is in an area where the Government wishes to promote tourism.  A similar stand is taken for certain industrial sectors.

Foreigner means any person who is not a citizen of the Republic and includes a foreign controlled company. Acquisition of real estate property includes:

• Transfer by registration
• Long leases of more than 33 years
• The acquisition and control of shares in a company which owns real estate, if such an acquisition results in the company becoming controlled by foreigners
• the establishment of a trust or other set up for the benefit of a foreigner

Application to the District Office and application details

The acquisition of real estate property by foreigners requires the approval of the District Officer of the district where the property to be acquired is situated under the Immovable Property Acquisition (Aliens) Law Cap. 109.  The details required for the application and its subsequent amendments are as follows:

a)    Form Comm.145 completed and signed  

b)    Contract of sale

c)    Curriculum Vitae of applicant

d)    Financial standing of applicant (bank statement will suffice)

e)    Particulars of the property

f)    Particulars of the current owner

g)    Copy of the building permit

h)    Terms of payment

i)    The way of acquisition (i.e. freehold, leasehold shares in property company etc).

j)    Copies of the government survey plans

k)    Marriage certificate in cases where the spouse does not have the same surname

l)    Copies of all the pages of the passport of the applicant and of his spouse

The letter of approval or refusal may take up to eight months or even longer, however, there is no restriction in taking possession of the property in the meantime.

The permit for the acquisition of immovable property by a foreigner is granted only if:

a)    The house will be used solely for the applicant’s own residence and the building plot or land does not exceed 4,014 square meters

b)    It will be used for professional or commercial business

c)    It will be used for the benefit of the Cyprus Economy in general (production of products that are related to the use of new technologies or technical knowledge or tourism).

The permit has the following conditions and restrictions:

a)    The transfer to be effected within a year from the date of the permit or within three years in case of constructions of a building on the property

b)    The costs to be paid in foreign currency

c)    All taxes to be paid in advance

d)    The permit is granted for the specific property and use only

Application to the District Land Registry Office

The transfer of ownership is effected at the District Land Registry Office on submission of the following documents:

a)    Application form N. 270

b)    The registration certificate of the property

c)    Copy of the District’s Office approval

d)    Evidence of payment of all the property taxes up to date.

Central Bank Exchange Control Regulations

As from 1 February 1997 the acquisition of real estate property in Cyprus by foreigners and companies owned by foreigners is no longer affected by foreign exchange controls.

Thus on disposal of the property the whole amount can be exported (after the tax obligations have been met) and provided that the following documents are presented:

(a)    a clearance certificate by The Commissioner of Income Tax

(b)    new contract of sale evidencing the sale

(c)    evidence that the property was purchased through external funds

(d)    any other evidence that the property has been sold

ESTATE DUTY

Estate Duty is not levied in relation to individuals who have died on or after 1 January 2000.

The Deceased Persons Estate (Taxation Regulations) Law of 2000 provides for a compulsory submission of an ‘assets and liabilities’ statement of the deceased person to the Commissioner of Taxation within six months from the date of death.

Immovable Property Tax

Immovable property tax is abolished as from 1 January 2017 for the tax year 2017 and for each subsequent year.

CAPITAL GAINS TAX

Capital Gains Tax is imposed on gains from disposal of immovable property situated in Cyprus, including shares of companies not listed on a recognized Stock Exchange which own immovable property situated in Cyprus at the rate of 20%.

Certain exemptions apply.

Stamp Duty

The purchase contract should be stamped within 30 days of its signing at the rate of  1,5 per thousand up to €170.000 and thereafter at the rate of 2,0 per thousand at the Inland Revenue. Failure to pay the stamp duty within 30 days will incur an additional penalty.

Transfer fees

Transfer fees are paid by the acquirer to the Department of Land and Surveys on transfers of immovable property and registration of any lease/sublease. The transfer fees are based on the value of the property or lease/sublease as assessed by the Department of Land  and Surveys,  as follows:

Value of property          Transfer fees rate      Fees        Cumulative fees

               €                              %                              €                      €

           0 –   85.000                3                            2.550                2.550

  85.000 – 170.000                5                           4.250                6.800

170.000 and over                8

Certain exemptions apply.

In the case of free transfers of property between the following parties, the transfer fees are calculated on the value of the property as at 1 January 2013 at the following rates:

• From parents to children                 0%
• Between spouses                          0,1%
• Between third degree relatives         0,1%

Mortgage Finance

• Some Banks can offer mortgage facilities in connection with the purchase.  The maximum amount that can be borrowed is the equivalent of 70% of the purchase price, subject to professional valuation.  Facilities can be offered in all major currencies (Stg£, US$, Euro, CHF, JPY).  A first mortgage will be required and the interest rate charged will be 2,5% above sterling base rate or dollar prime rate.  There is also an additional arrangement fee of 1% payable on the amount of the advance.
• Each commercial Bank has its own policy for property loans.
• General Guidelines
• Advice should be obtained from qualified and trustworthy property consultants.
• To ensure that the land is suitable for building purposes i.e. zoning restrictions, building regulations, access to an official road, availability of water supply, electricity and telephone lines.
• It must be made certain that the seller has a valid title to the property and that there are no encumbrances which will present problems with the transfer of ownership.
• In the case of purchase of an apartment or house it must be checked that the seller has secured the building and other permits and can be delivered with vacant possession.
• Legal advice to be obtained.
• In the contract of sale a provision should be made that the money already paid must be refunded should the District Officer refuse the application.
• A copy of the contract of sale should be deposited with the District Land Office.
• When buying an apartment, house etc it is very important to enquire as to the reputation and reliability of the developer.