Buying In Southern Cyprus
Non-resident foreigners (or non-EU residents) are limited to buying one home on Cyprus and they can only own up to a maximum of 4,014 square meters (the equivalent of 4 dunams, or donum, the Ottoman measurement for an acre). You’ll also need to apply to purchase with the government, but the permit is easily acquired with the help of an attorney. If you decide to sell your property and buy another, the permit is easily reobtained.
Take a look at the application to purchase here.
Those with EU residency are treated as citizens when it comes to the buying process, and no restrictions apply.
Freehold titles are typical, though titling issues do exist on the island, so this is something to verify.
The Buying Process
Overall, the buying process in Cyprus is straightforward and mostly familiar, but there are some additional steps foreigners are required to take.
When you find a property you’re interested in, you make an offer. Once accepted, a nominal deposit (of typically 1% of the sale price) is made to take it off the market for an agreed period (usually 30 days). This step is legally binding.
The contract is drawn up over the following days and upon signing a deposit of 30% to 50% of the agreed sale value is paid by the buyer. The remainder is paid according to terms set out in the contract. If buying preconstruction, installments are the typical payment plan; for resales, the buyer will be expected to remit full payment the day the title deed is transferred.
You must secure the property transfer by registering a signed and stamped copy of the contract with the Land Registry within two months of signing.
Non-Cypriot citizens must then request permission to acquire the property. This step is a formality, but you’ll be required to submit bank reference letters, a criminal background check, and several other documents. It can take up to a year to complete the process, but you can use the property as you wish in the meantime (even sell it before it’s been officially put in your name). In the rare event that this request is denied, you can reapply.
Transaction And Holding Costs
Overall, transaction costs for resale residential properties are moderate, but sales tax (VAT) on new properties is high. Generally, though, Cyprus has lower closing costs than Portugal, Italy, Spain, and many other European countries.
| Costs Of Buying Property | ||
| Fee | Amount | Paid By |
| Transfer Fees | 3% on properties valued at up to €85,430;5% at €85,430 – €170,861;
8% over €170,861 |
buyer |
| Stamp duty | 0.15% on value up to €170,000;0.20% for over €170,000 | buyer |
| Notary | 0.25% for properties over €500,000;0.50% for €10,000-500,00;
1% on less than €10,000 |
Buyer |
| Agent Fees | 3% – 5% | Seller |
| Legal Fees | 0.10% – 1.00% | Buyer |
| VAT* | 19% | buyer |
*A reduced VAT rate of 5% may apply in two cases: 1.) For those purchasing for the first time if the property is less than 250 square meters in area; 2.) For those purchasing a home intended as their primary, permanent residence for 10 years.
Property Tax: 0% (immovable property tax was abolished in January 2017)
Real Estate Tax: Calculated on the estimated market value of the property on Jan. 1, 1980. Due annually by the end of September; not deductible for income tax purposes.
| TAXABLE VALUE (€) | TAX RATE |
| Up to €12,500 | 0% |
| €12,500 to €40,000 | 0.60% on band over €12,500 |
| €40,000 – €120,000 | 0.80% on band over €40,000 |
| €120,000 – €170,000 | 0.90% on band over €120,000 |
| €170,000 – €300,000 | 1.10% on band over €170,000 |
| €300,000 – €500,000 | 1.30% on band over €300,000 |
| €500,000 – €800,000 | 1.50% on band over €500,000 |
| €800,000 – €3,000,000 | 1.70% on band over €800,000 |
| Over €3,000,000 | 1.90% on value over €3,000,000 |
Copyright: Global Property Guide
Property owners are also liable for an annual “town tax” that covers municipal services such as sewage, garbage collection, street lighting, etc., and ranges from 80 to 170 euros per year.
Rental income is subject to income tax, and a standard deduction of 20% of gross rental income is allowed to account for income-generating expenses. Taxable rental income is computed as gross rental income less 20% of gross rental income.
Capital gains tax is set at 20% on the gross selling price of a property, less the acquisition and improvement costs.
Transfers of property due to death or as a gift between relatives of up to the third-degree are not subject to capital gains.
Lifetime exemption deductions can be made from the capital gains, given just once per taxpayer. The deductible amount varies depending on the property seller and the property:
- An individual selling their private residence may deduct a lifetime exemption of 85,430 euros if they occupied it for at least five years.
- A farmer disposing or selling agricultural land may deduct a lifetime exemption of 25,629 euros.
- Any other property disposal may deduct a lifetime exemption of 17,086 euros.
Estate tax was abolished in January 2000.
Special Notes
There can be titling issues with real estate throughout the island, so always do full due diligence on a property before beginning any kind of negotiation.
Non-EU residents are not able to rent out properties in Cyprus.