Legal Information for buying property in Cyprus
TEMPORARY RESIDENCY IN CYPRUS
IntroductionAs a general rule non Cypriots and their families can live in Cyprus as long as they are able to show income, generated from abroad, which is adequate to maintain the families for as long as they are living here.
The regime governing this is less strict than that for offshore companies and it offers a straightforward process for acquiring temporary residence permits in Cyprus.
Without belittling the process the wealthier the person in question the easier it is for them to live here as a temporary resident. It must be made clear that a temporary resident cannot, unless his status is officially changed, work in Cyprus.
RequirementsAbility to show income generated abroad; the income should be no less than CYP12,000 per annum plus rent or enough funds to purchase a property here. There may also be an additional financial requirement for families with large, say over three, number of children.
Obligation to set up a local disbursement account in Cyprus Pounds.If a property is to be purchased then there has to be proof that foreign funds were used for the purchase. It is important to note that purchasing a property here gives better grounds for allowing a family to settle here as temporary residents.
Once a decision is made to proceed with settling here, it is advisable for an application to be filed with the immigration authorities prior to entry in Cyprus of the family. Certified copies of the passports will be required including three photographs of each family member. A bank reference for the major breadwinner is always advisable.Bank statements showing proof of funds as well as an employment contract with a foreign company indicating the level of income enjoyed by the breadwinner is also of importance.
There may also be a requirement for the family to be interviewed by the immigration authorities.
NOTES ON CYPRUS LAW RELATING TO PROPERTY PURCHASE BY ALIENS
ACQUISITION1. Under the Immovable Property Acquisition (Aliens) Law Cap 109 no non-Cypriot can acquire immovable property without prior permission of the Council of Ministers. Such permission is required both on purchase of freehold and on leases exceeding 33 years. Normally permission is granted, after written application, to bona fide alien individuals to acquire a flat or house or a piece of land for the erection of a house not exceeding two donums. Permission is usually granted for personal use and not for letting or commercial use. Commercial use is dealt with on an entirely different basis and a different set of criteria apply.
DISPOSITION2. Once permission is granted and the property registered in the name of the alien, there is no restriction on the alien selling the property or disposing of it by Will. Furthermore, no permission will be required for the legal heir to have the property transferred into his name.
CONTRACT OF SALE AND LEASES3. Under the Cyprus Law such Law contracts must be in writing. It is also advisable that contracts of sale be deposited in the relevant District Lands Office within two months after the signing of the contract so that the purchaser’s right to pursue the remedy of specific performance in the event of breach can be protected. Leases exceeding 15 years can be registered and registration should be effected within 3 months of the signing of the lease.
TRANSFER OF TITLE4. Transfer can be effected once permission to acquire has been granted and the Central Bank has certified the import of foreign funds. Transfer fees are payable by the purchaser on the sale price of the current market value.
EXCHANGE CONTROL5. With regard to the purchase of immovable property in Cyprus, Central Bank approval is required on the transfer of property to aliens. Such approval is granted if it can be proved by the applicant that funds for the purchase were imported from abroad. Note that without the approval, on a subsequent sale, permission to remit the proceeds out of Cyprus will not be allowed. On the sale of property, exportation of the purchase price will be allowed.
CAPITAL GAINS TAX6. As from 1 August 1980 capital gains tax is levied at the rate of 20% on gains in excess of CYP10,000 arising from the disposal of immovable property by individuals.
PROPERTY TAX7. Property tax of CYP2.00 per thousand of the market value of the property as at 1 January 1980 is payable annually. The first CYP100,000 is exempt.
ESTATE DUTY8. Estate duty has been abolished in Cyprus.
OTHER EXPENSES9. a. Water rates and electricity charges are in accordance with the amount consumed.
b. Refuse collection chares vary according to the district and property and may be approximately CYP50 to CYP100 p.a.
c. Municipality of village rates are minimal and may be approximately CYP50 p.a.
d. In the case of a block of apartments or multiple developments, there is a common expenses charge payable by each purchaser relating to the expenses in maintaining the areas commonly used, e.g. lifts, staircases, swimming pool, central heating, lighting. This charge varies according to the type of property and the amenities provided and the purchaser should ascertain beforehand the approximate amount of such common charge from the developer before entering into any agreement. Generally it is not excessive.
OTHER MATTERS10. It is important that profession legal advice be obtained before entering into any agreement for the purchase of a property in Cyprus. In certain cases it may also be necessary to obtain professional architectural advice.
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