Acquisition & Disposal Of Immovable Property In Cyprus

It is a fact that purchasing and/or selling an Immovable Property entails a stressful procedure. This article briefly outlines the procedure an individual or a legal entity must follow when acquiring or disposing of an immovable property as well as the respectful rights and obligations.

Purchase of Immovable Property in Cyprus

First Stage:

When deciding whether to purchase an immoveable property, the prospective purchaser must ensure that proper due diligence will be made over the target property, in order to avoid any future complications and surprises. Firstly, it is important to verify whether the seller holds separate title deed of the immovable property or whether the immovable property is mortgaged. In cases where the immovable property is still under construction, it needs to be verified that the appropriate building and planning permits exist.

In cases where the immovable property is mortgaged, a confirmation letter from the bank must be requested securing the rights of the purchaser (i.e. that the immovable property will be released from the mortgage upon the full payment or when the target property is transferred to the purchaser’s name).

Second Stage:

Once the due diligence process is satisfactorily completed and the purchaser decides to proceed with the acquisition of the property, a Contract of Sale or Assignment Agreement (depending on the particular case) must be discussed, negotiated, drafted and executed.

Third Stage:

Once the Contract of Sale or Assignment Agreement has been signed, the purchaser needs within 30 days starting from the execution day to pay the stamp duties, which are calculated as below:

Value between €1 and €5.000 = no duty
Value between €5.001 and €170.000 = duty in the amount of €1,50 for every €1.000 (or part of €1.000)
Value in excess of €170.000 = duty in the amount of €2,00 for every €1.000 (or part of €1.000), up to a cap of €20.000

In the case where the purchaser will carry on with an Assignment Agreement, the tax authority will have to calculate the stamps duties based on the highest price, between the initial Contract of Sale and the Assignment Agreement.

Fourth Stage:

The Contract of Sale or Assignment Agreement must be submitted to the Land Registry in order to secure the purchaser’s rights for the enforcement of the respective agreement. The Contract of Sale must be submitted within six months and the Assignment Agreement must be submitted within two months as of the day of execution, respectively.

Fifth Stage:

The final stage entails the transfer of title deed on the name of the purchaser. The purchaser at this stage will have to pay the relevant immovable property transfer fees. The transfer fees are calculated by the Land Registry as follow:

  • 3% on €0 – €85.000,00 of the value of the Immovable Property
  • 5% on €85.000,00 – €170.000,00 of the value of the Immovable Property
  • 8% on €170.000,00 and over the value of the Immovable Property

It is important to note that currently the transfer fees are discounted by 50%.

The purchaser is entitled to apply for a reduced VAT (5%) on the acquisition of immovable property which is to be used as a residence instead of 19%.

For the reduced VAT rate to apply, the following conditions should be met:

  • The immovable property must be used as the primary and permanent residence of the applicant (for 10 years);
  • The applicant must be a physical person, over the age of 18, hence legal entities are excluded from the VAT reduction;
  • The applicant has not acquired any other residence in Cyprus with a reduced VAT rate.

If the purchaser is not an EU resident, he/she will have to receive the Council of Ministers approval before the immovable property is transferred to his/her name.

Sale of Immovable Property in Cyprus

First Stage:

The seller of the immovable property is obligated to provide the prospective buyer with all the information he/she requires including:

  1. In cases where a separate title deed exists:
  • A copy of the Title Deed;
  • The Land Registry search;
  • If the seller is a company the buyer needs a copy of Corporate Documents or when the seller is an individual the buyer needs a copy of the seller’s identity card/passport;
  1. In cases where the Immovable Property is under construction:
  • Copy of the title deed;
  • The Land Registry search;
  • If the seller is a company the buyer needs a copy of Corporate Documents or when the seller is an individual the buyer needs a copy of the seller’s identity card/passport;
  • Architecture plans;
  • Copy of building permit;
  • Copy of planning permit;
  • Technical specs.

Second Stage:

Once the due diligence process is satisfactorily completed and the purchaser decides to proceed with the acquisition of the property, a Contract of Sale or Assignment Agreement (depending on the particular case) must be discussed, negotiated, drafted and executed.
Third Stage:

Once the Contract of Sale or Assignment Agreement has been signed, the purchaser needs within 30 days starting from the execution day to pay the stamp duties, at the rates indicated above.

Fourth Stage:

Besides providing the purchaser with tax clearance, the seller of the immovable property must also provide the purchaser with other documents from the local municipality and sewage board indicating that there are no outstanding fees to be settled.

The rate of Capital Gains Tax is 20% on profits obtained from the sale of immovable property situated in Cyprus, after providing for an increase indexation payment. Certain exceptions apply.

Fifth Stage:

Finally, the seller must transfer the immovable property to the purchaser. This is when the seller also provides the purchaser with the documents outlined in the third and fourth stage.

For professional advice and assistance you may contact us at solutions@oxfordcy.com and our legal team will be more than happy to assist.