living in cyprus

Parties must initially sign a Contract of Sale, having placed a deposit on a property, which is drawn up by the purchasers Advocate.

The purchasers Advocate must arrange for a Cypriot bank account to be opened for him, which is used to pay for the property. It is important to remember that interest earned on capital emanating from foreign funds is not taxed. Cyprus and the UK have a double tax treaty and arrangements can be made for purchasers wishing to retire in Cyprus. Having resided in Cyprus for at least 6 months and 1 day, purchasers may then elect to have their pension or investment income paid directly into their Cypriot external account and since it is generated from outside Cyprus it will be taxed at just 5%. According to the Cyprus tax system, residents are obliged to declare their income from pension or any other sources to tax authorities – a financial or legal advisor can determine your tax liability.

The next step is for the signed contract to be stamped by the purchasers Advocate. This must be done within 30 days of its dated signature or a fine will be imposed. Stamp Duty is levied at the rate of £1.50 per £1,000 spent up to £100,000 and £2 per £1,000 thereafter. The property is then encumbered on behalf of the Purchaser by the Advocate, in order for the vendor to be prevented from re-selling the said property before the transfer procedure.

Payment for the property must be made in foreign funds emanating from abroad. All commercial banks in Cyprus are authorised to offer mortgage facilities to assist in the purchase of property. The loan will be in foreign currency. The amount ranges from 7 to 10 years. Easy terms of payment and long-term in-house finance schemes are also available.

In order to be allowed to export your money from Cyprus, should you wish to sell your property, evidence of payment for the property with foreign exchange must be provided to the Central Bank by the purchasers Advocate, along with a duly stamped cancellation contract. The law dictates that the equivalent of the full amount paid for the property in foreign funds and any increase in the value of the property may be transferred abroad at the time of resale. As for the capital gains tax position, the first £10,000 is tax exempt and the rate of 20% is charged on the rest of the gain. With Cyprus joining the EU, currency exchange control restrictions have been abolished both in respect of purchasing and selling immovable property.

Permission from the Council of Ministers and evidence that the property has been paid for with foreign exchange is needed in order to obtain immovable property. 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 three 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 applies.