Costs on purchase of Cyprus property

Whether you are buying property in the U.K, France or Cyprus there are addition costs that you must consider and take into account. These costs vary from country to country. In Cyprus these costs are fairly low but it is important to be aware of the set-up costs and all costs for that matter associated with your purchase before you put pen to paper. The following should give you a good idea of the property fees and associated costs in Cyprus.

Legal Fees

Although the procedure of buying property in Cyprus is very simple it is advisable to instruct a professional to draft your contract of sale. Solicitors' fees in Cyprus vary and expect to pay an average 1% of the purchase price of the property. You can agree on this fee before you instruct a solicitor. Our fee for the preparation and drafting of the contract of sale is € 512.

Stamp Duty

Stamp duty is payable after signature of the agreement of sale and unless otherwise agreed the purchaser is normally liable for the stamp duty on the contract. This is calculated and based on the purchase price that is reflected in the contract of sale. The duty is payable at the rate of 2.60 € per thousand up to the value of € 170 800 and thereafter the rate is 3.40 € per thousand.

For example if the purchase price is € 256,290 the stamp duty will be € 427 calculated as follows:

Remember that the contract of sale must be stamped within 30 days of signature following which it will attract a penalty if stamped after this period. Failure to stamp the contract does not invalidate the contract but if and when required to be used for e.g. to take transfer or in a court of law you will then be obliged to stamp it with the correct amount and pay the penalty. It is imperative that your contract is correctly stamped as you will have to register it at the Lands Registry for your own protection under the Specific Performance Law. This too is not obligatory but it is advisable and recommended.

Mortgage Fees

Normally the registration fee is 1% of the secured amount plus stamps. The banks normally charge an arrangement fee and you should thus budget for between 2% to 2.5% for this in total. Some banks agree to add their total mortgage costs to the mortgage loan so you may not have to outlay this amount immediately as it will be paid over the duration of your mortgage loan.

Transfer Fees

Before registration of the property in the purchasers name and at the time of the issuing of a title deed the purchaser is liable to pay the transfer tax to the Land Registry office. The amount payable is set on a sliding scale calculated according to the property's market value at the time of signing of the contract of sale. The transfer fee is calculated as follows:

On the transfer of a property purchased for € 187 880 the purchaser will have to pay € 8,198 in transfer fees calculated as follows:

The above is based on the assumption that the property has been purchased and is to be transferred in the name of one person. If the property however has been purchased by two persons then the property value of the property is apportioned between the two with the effect that the transfer fee will be reduced.

With the above example and for the same property purchased for € 187,880 and to be transferred in two names they will be liable to pay only € 5978 in transfer fees calculated as follows:

The following are the costs involved after purchasing the property.

Immovable Property Tax

This is an annual tax payable by the registered owner of the property calculated on the market value of the property as at 1st January 1980. The resultant effect is that as it is not based on current market value there is no tax payable for the majority of properties in Cyprus.

Local aythoruty Taxes and Rates

These taxes are calculated and are based on the size and area of the property. The annual costs are negligible and between € 85 and 205 and cover sewerage, refuse removal charges and road electricity.

Ameneties

The basic utilities in respect of water, electricity and telephone are payable individually and based on consumption and usage. There may be deposits payable however which are refundable with termination of the service. Expect however to pay a deposit of € 170 for water and € 170 for telephone whilst for electricity it may be slightly less if anything.

For the monthly charges expect to pay in the region of € 34 per month for electricity and € 17 for water for a two bedroom apartment for a working family of two.

Communal Charges

When purchasing in a development you will be called upon to contribute towards the communal charges for the upkeep of the swimming pool and communal areas, electricity for the common areas, management fees and repairs. These costs vary depending on the size of the development with some owners including the costs of blanket insurance for all the apartments. Expect to pay in the region of about € 1025 per annum.

Capital Gains Tax

Capital Gains Tax in Cyprus only comes into the equation when immovable property is sold. It is levied at a flat rate of 20% on gains arising from the disposal of the property. The same will apply to the disposal of the shares in a company whose assets consists mainly of immovable property.

The gains are calculated as being the difference between your sale proceeds and the costs of the acquisition. The costs will include professional and legal fees paid, commissions (if any), interest payments made, costs of any extensions to the property as well as the annual inflation rate as published from time to time.

In addition to the above individuals are entitled to the following lifetime allowances:

- The first € 17 080 of gains from the disposal of any property.
- The first € 25 620 of gains arising from the disposal of agricultural land (subject to conditions).
- The first € 85 400 of gains arising from the disposal of a residence that has been utilized by the owner for his own use. There are certain riders to this allowance and two of the conditions are that this residence must have been the only house owned by the owner and that he/she must have lived in it for the past 5 years.

The above allowances are not available separately and a person claiming a combination of the allowances listed above will only be allowed a maximum lifetime allowance of € 85 400.