EU citizens are allowed to purchase real estate within Cyprus without any restrictions. Under the Immovable Property Acquisition Act, foreigners, companies and trusts may acquire freehold immovable property in Cyprus subject to prior permission from the Council of Ministers.
Non-Cypriot citizens are permitted to acquire:
Upon exchange and signing of a contract of purchase, permission must be sought from the Council of Ministers by a written application from the foreign buyer.
In order for the contract to be legally binding, the purchaser must deposit the contract within two months at the Land Titles Office. Ownership in Cyprus is denoted by title deeds, issued by the Land Titles Office.
The prospective buyer needs to apply for the consent of the Council of Ministers (form 145) as well as a permit from the Central Bank of Cyprus, concerning the transfer of funds.
Transfer of ownership from Vendor to Purchaser is accomplished by a simple procedure through the Cyprus Land Registry either by the purchaser or by a third party with the power of attorney.
Evidence of payment for the property with Foreign Exchange must be provided as it is a prerequisite for the registration.
Transfer fees are payable to the Land Titles Office by the purchaser on the purchase price upon transfer of the property to the buyer’s name, as per the table shown below:
| Value of Property | Transfer Fees |
|---|---|
| Up to €85,000 | 3.0% |
| From €85,000 – €170,000 | 5.0% |
| Over €170,000 | 8.0% |
This tax is payable annually on property owned as of January 1st of each year at its current market value using a base year, 01/01/1980. This is shown in the table below:
| Value of Property | Annual Tax |
|---|---|
| Up to €12,500 | None |
| €12,501 – €40,000 | 0.6% |
| €40,001 – €120,000 | 0.8% |
| €120,001 – €170,000 | 0.9% |
| €170,001 – €300,000 | 1.1% |
| €300,001 – €500,000 | 1.3% |
| €500,001 – €800,000 | 1.5% |
| €800,001 – €3,000,000 | 1.7% |
| Over €3,000,000 | 1.9% |
The purchaser is required to pay Stamp Duty prior to depositing the contract of purchase at the Land Titles Office. This Stamp Duty is payable to the Tax Authorities and is due within 30 days of signing and exchanging the contract. This is based on the following table:
| Value of Property | Duty |
|---|---|
| Up to €5,000 | None |
| €5,000 – €170,000 | €1.50 per thousand |
| Over €170,000 | €2.00 per thousand |
Purchased property by a foreigner can be sold at any time and the proceeds of the sale can be transferred overseas.
Capital gains tax is paid at the rate of 20% on the net profit that arises from a sale of real estate. The calculation is as follows:
Taxable Gain = Sale Proceeds – (Purchase Price + Professional and Legal Fees + Agent’s Commission + Interest Paid + Indexation Profit + €17,086 per individual, per lifetime)
Furthermore, a €85,000 allowance is given if the property sold was the prime residence of the vendor (being an individual or a couple) for at least five years. This is only permitted once per lifetime. If the profit has not been exhausted during the first sale, the balance will be carried forward to the next sale.
Companies are not eligible to claim the aforementioned allowance.
For example:
| Capital Gains Tax | (€) |
|---|---|
| Proceeds from Sale | 150,000 |
| Less Cost of Acquisition | (75,000) |
| Less Inflation allowance (75.000 x 10%) | (7,500) |
| Gains from Property | 67,500 |
| Less Investment allowance | (17,086) |
| TAXABLE Gain on Sale of Property | 50,414 |
| Capital Gains Tax Due (50,414 x 20%) | 10,082.80 |
The following cases are exempt from Capital Gains Tax:
V.A.T at the rate of 19% applies to all new constructions.
A flat fee of €50 applies to the registration of a contract at the Land Registry Office.