Additional costs associated with property purchasing vary from country to country. In Cyprus these costs are relatively low. The following should give you a good idea of the property related costs in Cyprus.

Legal Fees.

The procedure of buying property in Cyprus is very straight forward and transparent but you need to instruct a professional to draft your contract of sale. Never buy off-the-shelf contracts and never be led into a false sense of security to avoid a contract. The size of the island, fear of bad word of mouth and dishonour guarantee a smooth transaction in most cases. Some locals transact on good faith alone and some would expect others to be of the same mindset. Under no circumstances should you transact without the advice of a solicitor and a written contract of sale. Solicitors' fees in Cyprus vary therefore shop around and agree a fee beforehand.

Stamp Duty.

Stamp duty is paid to the government to 'formalise' the contract of sale. The purchaser pays this and the duty is based on the purchase price referred to 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 € 200,000 the stamp duty will be €314,60  calculated as follows:

The first € 170,800 at 0.15%  €  256,20
The following € 85,400 at 0.20%  € 58,40
Total  € 314,60

The contract of sale must be stamped within 30 days of signature otherwise a penalty applies if it is stamped after this period. Failure to stamp the contract does not invalidate the contract but it will be required for official purposes at the Land Registry to transfer ownership or in a court of law. You will then be obliged to stamp it with the correct amount and pay any penalties if applicable. The stamped contract can be submitted with the Lands Registry before the agreed transfer date and this guarantees protection for the buyer since the seller cannot scam buyers by selling the property twice or three times to separate buyers or burdening the property with mortgages.

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.

Transfer Fees.

Before registration of the property in the purchasers name by the Land registry, the purchaser is liable to pay a transfer tax. The amount payable is set on a sliding scale calculated according to the property's objective market value decided by the Land Registry and not on the value stated on the contract of sale. If the Registry calculates a lower value then expect to be taxed on the contract value. Yes you heard right, governments are greedy! The transfer fee is calculated as follows:

On the transfer of a property purchased for € 200,000 the purchaser will have to pay € 9168 in transfer fees calculated as follows:

First € 85,400 taxed @ 3%  € 2,562
Next € 85,400 @ 5%  € 4,270
Following € 29,200 @ 8%  €2,336
Total  € 9,168

If the contract of sale states that the property has been purchased by two or more people then the property value of the property is apportioned according to the purchasers' share with the effect that the transfer fee will be reduced.

With the above example and for the same property purchased for € 200,000 by a couple, to be transferred in two names the tax will be as follows:

Each Person is apportioned € 100,000
First € 85,400 taxed @ 3%  € 2,562
Following € 14,600 @ 5%  € 730
Total  € 3,292 each person
Total for the 2  € 6,584

Costs 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. 1980's values are comparatively very low and there is virtually no tax payable for the majority of properties in Cyprus.

Local Authority Taxes and Rates.

These taxes are based on the size and area of the property. The annual costs are negligible and cover sewerage, rubbish colection charges and road electricity.

Utilities.

The basic utilities in respect of water, electricity and telephone are payable individually and based on consumption and usage.

Communal Charges.

If you are purchasing a property with communal grounds then you will need to pay common expenses and monthly or yearly maintenance fees. These costs vary depending on the size of the development.
Capital Gains Tax

Capital Gains Tax in Cyprus is payable when 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 to registered estate agents, interest payments made, costs of any extensions to the property. An inflation rate is added to the value of the acquisition price to reflect the value of the property had it been bought today.

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 and 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.