Financing Your Purchase In Cyprus
There are various ways to finance your purchase. You should of course take independent financial advice to ascertain which is right for you. We have taken this into account when forming our relationship with CONTI FINANCIAL SERVICES LTD who will act wholly and independently on your behalf and will only ever give you best advice.
The normal Cypriot practice when purchasing 'off-plan' property is to pay for the building in stages as it is built. In most overseas countries 30-40% deposits are often required by developers and the lenders. In Cyprus, at the moment the best available is 80% LTV repayment mortgage. Leaving you to fund 20% of the purchase price. We will occasionally have access to an interest only mortgage for an initial set period, then reverting back to repayment for the remainder of the term. We will of course inform you if these types of mortgages are available on the developments. We assure you that in association with CONTI FINANCIAL SERVICES LTD we will be able to offer you the best products available on the market for both U.K and overseas investments.
On certain developments we may be able to offer staged funding, this will be as follows:- 10% deposit at the time of exchange which is usually 28 days after reservation, then 5% six months later and a further 5% six months after that. The rest of the funding will be covered by the 80% mortgage. Again, this may vary, but we will inform you of the offers on each development.
Inspection Trips
If you wish to arrange an inspection trip we can help you to organise this in conjunction with our developers. Please contact us for more details.
Deposits
Louise Zambartas (Cypriot Solicitor) will explain to you how to arrange the exchange and transfer of funds.
Mortgage
You will need a bank account in Cyprus in order to complete your purchase, with both a Sterling account and a Cypriot Pounds account. This will allow you to transfer funds from the U.K.
Banks in Cyprus have very modern up to date systems and provide a wide variety of services including Internet banking that can be accessed from the UK. Opening accounts is a simple process.
Once your Contract has been agreed and signed, it is necessary for you to make an application to the Council of Ministers to grant their approval for a non-Cypriot to acquire what is known as ‘immovable property’. Your solicitor will make this application on your behalf.
At this date, no U.K citizen has ever been refused this approval. This is a routine procedure that can take up to twelve months to complete, but there is no restriction on you taking full possession of your property pending the granting of the approval.
The system provides for the following:-
1. You can live in your property from the moment you take delivery of it, prior to the Council of Ministers granting approval.
2. You can re-sell your property during this time and inheritance rights are not affected by the process.
3. Should approval not be granted, you can re-apply.
4. Should approval not be granted, you will have seventeen (17) years in which to sell your house.
Capital Gains Tax
Capital Gains Tax is levied at 20% on profits arising from the sale of a property. However, when ‘foreign’ owned property is sold, there are generous allowances and exemptions from the tax. The ‘gain’ also takes inflation into account as well as estate agents fees. Remember to keep evidence of improvements to your property after taking possession of it, such as invoices, as these will be useful when the ‘gain’ is calculated.
Inheritance tax
There is no inheritance tax (Death Duty) in Cyprus.
The cost of purchasing and the ongoing expenses:-
Your fixed purchasing costs are likely to be made up as follows:-
The cost of the property plus any mortgage fees and interest.
Council of Ministers Application:-
CYP 100 – 200 which is often included in your solicitor’s fees.
Property Transfer Tax:-
See below
Stamp Duty:-
See below
Property Transfer Tax:-
The payment of Property Transfer Tax is required in order to transfer the Freehold ownership to your name and is payable once the property is registered in your name at the Land Registry Office. This process cannot be completed until after the Council of Ministers approval has been received. In reality, this means that it will take between one and six years from purchasing your property before you actually pay the tax.
The tax is payable once only to the Land Registry and is calculated as follows:-
Value of Property (CYP) Transfer fee rate %
Up to 50,000 3%
From 50,001 to 100,000 5%
Above 100,000 8%
Method of charging:- if a property has been bought jointly by two or more people i.e. if their names are on the Contract of Sale, then the cost of the property may be divided equally between those owners. The tax will then be charged to each owner for their portion, meaning that the individual cost will fall into a lower price band.
The grand total will then be less.
For example:-
Property purchase price: CYP 120,000
With 1 owner
CYP50,000 at 3% - 1,500
CYP50,000 at 5% - 2,500
CYP20,000 at 8% - 1,600 = Total CYP 5,600
With 2 owners
CYP50,000 at 3% - 1,500
CYP10,000 at 5% - 500 = 2,000 each = Total CYP 4,000
Before the contract is lodged in the Land registry Office for specific performance purposes it needs to be stamped by the Tax office.
The Stamp Duty is calculated as follows:-
CYP 1.50 on the first CYP 100,000 and CYP 2.00 per thousand for part of the purchase exceeding CYP 100.000
For example if the purchase price is CYP 150.00
The first CYP 100.000 1.5% = CYP 150.00
Next CYP 50.000 2% = CYP 100
Total = CYP 250.00
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