 |
LEGAL INFORMATION
A) THE PROCEDURE FOR PURCHASING PROPERTY IN
CYPRUS.
For
the purchase of property in Cyprus by non-Cypriots the following
procedure must be followed:
1.
Contract of Sale.
The lawyer responsible for drafting the contact besides
inserting the fair terms and conditions for the protection and
interest of the buyer will examine the deeds of the property
sold by obtaining a copy from the Vendor or the Land Registry
Office and generally he will make sure that all the details
correspond to the property in question and that it can be sold
to the prospective buyer assuring that at the end the buyer will
be able to register the title deed in his name free of any
encumbrances. When the contract is ready at the satisfaction of
the buyer it can be signed by the buyer himself or by his lawyer
by the virtue of the power of attorney that can also be used for
all other necessary acts and documents until the completion of
the transaction.
2.
Stamp Duty.
Once the contract is signed the purchaser is responsible for the
payment of stamp duty at the rate of CYP1,50 per thousand
towards the purchase price up to the value of CYP100.000,
thereafter the rate is CYP2,00 per thousand. The contract must
be stamped within 30 days after its signing in order to avoid
the payment of a fine.
3.
Lodging a copy of the
contract of sale with the Land Registry Office.
As from the date of signing the contract of sale the buyer had
the right within 2 months from that date to lodge the contract
with the Land Registry Office for what is called specific
performance purposes. This is very important for the protection
of the buyer mainly for two reasons. First, once the contract is
lodged the buyer is considered the beneficial owner of the
property until the time he becomes both the beneficial and legal
owner of the property by transferring the title deed in his
name. Therefore, there is a clear declaration that the buyer
bought the property in question, the Land Registry Office is
aware of this transaction and his interest is protected.
The second main reason is to secure that the title deed will
pass to the buyer even if the vendor is not willing to act for
that purpose. Title deeds usually are ready in approximately 3
years after completion of the whole project, which is considered
a standard practice in Cyprus (unless the property sold is
already built some years ago and is a single project, which
means that the title deed is available when the contract is
signed). At that time if the vendor is delaying or refusing to
grant the deeds then the buyer can file an action against him
and ask the Court inter alia for an injunction for specific
performance otherwise the only remedy available to the buyer
would be an action for damages something undesirable especially
when the property in 3 years time is worth another e.g. 40% of
the original purchase price.
4.
Payments to the
vendor.
After the contract is signed the lawyer of the purchaser will
arrange to open the necessary accounts in the name of the
purchaser in a local bank which are going to be used by the
purchaser in order to make payments to the vendor.
5.
Permission from the
Council of Ministers.
Before transfer of the property sold in the name of the
purchaser permission must be sought from the Council of
Ministers (District Office) by written application which must be
submitted by the purchaser after the agreement is signed.
However, this permission is granted more or less as a matter of
course to all bona fide purchasers. This procedure may take 8 to
10 months but in the meantime, purchasers can take possession of
the property without any restriction.
6.
Transfer of Ownership
at the Land Registry office.
The transaction is concluded with the transfer of ownership by
simple process of registration at the Land Registry Office once
the necessary permission from the Council of Ministers is
granted (as described above) and as soon as separate title deed
for the property sold is issued by the Land Registry Office
reflecting the property erected on the land. At this stage the
buyer is responsible for the transfer fees. The rates are on a
graduated scale towards the price of the property i.e. up to
CYP50,000 3%, from CYP50,000 to 100,000 the rate is 5% and from
over CYP100,000 is 8%.
For
example if the purchase price is CYP80,000
The
first CYP50,000 x 3% = CYP1,500
Next
CYP30,000 x 5% = CYP1,500
-----------------
Total CYP3,000
If the purchase is made in joint names then the total purchase
price is divided by two and each Purchaser pays transfer fees on
the half of the purchase price and the purchasers have a fee
reduction advantage.
For example if the purchase price is CYP80,000 each person will
pay transfer fees on CYP40,000
The first person will pay CYP40,000 x 3% = CYP1,200
The second person will pay CYP40,000 x 3% = CYP1,200
--------------------
Total CYP2,400
All the above steps for purchasing property in Cyprus can be
done by a power of attorney the Purchaser will sign for his
lawyer and the purchaser does not have to come to Cyprus in
order to purchase property in Cyprus.
B) THE ENTRY OF CYPRUS IN THE EU AND THE CHANGES IN RESPECT OF
BUYING A PROPERTY IN CYPRUS.
Before Cyprus entered the EU there was a restriction concerning
the extent of the land a European can buy. After Cyprus entered
the EU a European can buy as much land as he wants.
After Cyprus entered the EU Europeans can establish most types of
companies in Cyprus and own them 100%. They can register in the
name of the company the house as a holiday house of the directors
of the company.
After Cyprus entered the EU two non relatives can register a
property in joint names.
Before Cyprus entered the EU a European could register one house
in his name. But after entering the EU a European can register in
his name as many houses as he wants by obtaining a temporary
permit (it is easily obtained) and by signing a document that he
will stay 5 years in Cyprus. The most probable is that until 2008
all restrictions in respect of Europeans will be abolished, so it
is very probable that if you will buy more than one house until
the title deeds of the houses will be ready you will be allowed to
register all these houses on your name without the above
requirements.
C) TAXES AND PURCHASE OF PROPERTY IN CYPRUS.
Inheritance Tax: The Inheritance tax was abolished in Cyprus as
from 1/1/2000
Pension Tax: If you move to Cyprus you pay tax on your pension
income at 5% with a personal allowance of CYP2000 (GBP 2350).
|
Powered by by
Target Point |
|
|
|
