Finance & Mortgages

Compared to some countries the buying procedure in Cyprus is quite straightforward.

A deposit of  €2,000 to €3,000 withdraws the property from the market. Within 5 weeks the contract must be signed and a deposit of 20% to 30% is paid.

At this time the contract is lodged with the Land Registry and the client becomes the beneficiary owner of that property. The outstanding balance is then divided into instalments paid according to the progress of the construction and the amount of deposit paid, such as; 20% on completion of the foundations 20% on completion of the brickwork and plastering 20% on completion of the flooring 10% on delivery.

According to Cyprus Law, the Contract exists in written format and it should be registered at the Land Registry Office within two months from the date of signature to guarantee the protection of the legal rights of the purchaser, in the event of non-observance of the Contract. Once the Contract of Sale is signed and registered at the Land Registry the ownership of the purchaser is protected until the Title Deeds are issued and transferred to his/her name.

Tax

Cyprus is a very tax-efficient country in which to either invest or to have as a permanent place of residence. Despite recent tax reforms due to Cyprus’s accession to the EU, taxation in Cyprus is still low in comparison to other European Countries.

• Cyprus has a double taxation treaty with the many countries including the UK. The main purpose of this is the avoidance of double taxation on income earned
• If you reside in Cyprus for more than 183 days a year, you are considered a resident and you will be subject to taxation on your worldwide income as follows:

• Capital Gains Tax – this applies to income gained by the sale of immovable property and the rate is 20%. However, there is an indexation allowance and other generous exemptions.
• Inheritance Tax – this tax was abolished in January 2000
• If you are trading in multiple properties or contracts then a Cypriot Limited Liability Company is a very tax-efficient method of conducting this business with Corporation Tax on the profit at 10%.

We strongly recommend taking advice from an accountant or Independent Financial Advisor to ascertain the best strategy to take.

Stamp Duty is then due on the property as follows:

1. Up to CYP 100,000 (€171,000) 0.15%
2. Over CYP 100,000 (€171,000) 0.2%

Property Transfer fees are necessary to transfer the property to your name as soon as the government authority has issued the Title Deed and the purchase has been settled.

Transfer Fees are as follows:

a. Up to €85,430 = 3%
b. From €85,430 to €170,860  = 5%
c. Over €170,860 = 8%

How much can I borrow & what proof of income is required?

There are no non-status/ self-certification mortgage facilities available in Cyprus, however renting out your property is permitted, therefore all loans need to be supported by a minimum of, proof of income. If you are employed, you will need to produce, your last three months payslips, P60/employers reference and your last 6 months Personal bank statements. If you are self-employed you will need copies of your Audited Accounts together with your last 12 months business, and 6 months personal bank statements.

The Lenders in Cyprus will not take into account any proposed rental income from the property that you wish to buy.
Your loan will be based on your personal (or joint) 'net' pay, and is calculated on an affordability basis. For you to be considered by the lenders in Cyprus your total out-goings must not exceed 35% of your net monthly income.
A simple example; If your total net monthly income is €1,000 your total out-goings must not exceed €350, you must have €650 per month to be put towards the mortgage repayments to be considered.

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