Rules for foreigners purchasing real estate in Cyprus

Rules for purchasing real estate in Cyprus

Purchasing real estate in Cyprus for foreign citizens is associated with a number of legal restrictions and formalities that are important to consider. EU citizens have the privilege of freely acquiring property on the island without additional permits. However, for citizens from other countries, approval from the Council of Ministers is required. This process can slow down the transaction, despite its formal nature.

Limits and restrictions

Foreign nationals may purchase real estate in Cyprus in their own name with no more than two objects, the total area of which does not exceed 4014 square meters. These properties may include both residential and commercial premises as well as land plots. Such a restriction applies to spouses, which This restriction also applies to spouses, which allows the "excess" real estate to be registered in the name of children or through the registration of a company on the island.

Legal aspects and transactions

• Tax Liabilities:Foreign citizens are required to pay taxes annually and may also need to notify the tax authorities of their country about acquiring assets on the island. To carry out such transactions, foreigners need to open a bank account in a local bank.
• Informing the tax authorities:Russian citizens, being tax residents of Russia, are required to notify the Russian tax service about the existence of accounts in foreign banks or the opening of companies abroad. Although Cyprus does not require official notification of such accounts, Russian tax laws demand appropriate reporting.

International agreements and taxation

Cyprus has signed double tax treaties with most countries, including Russia, Ukraine, Belarus, Kazakhstan and others. These treaties regulate the taxation of income from real estate and other assets, which makes investments on the island more predictable and transparent for foreign investors. foreign investors.

Conclusion

Thus, the process of acquiring real estate in Cyprus is governed by specific regulations and requires strict adherence to legal and financial procedures.

Stamp duty

The stamp duty, also known as the stamp tax, is a mandatory tax levied on the registration of transactions and the documentation for the transfer of ownership rights. The rate is 0.15% of the value of the property up to €170,860 and 0.2% of the amount exceeding that sum. The payment must be made within 30 days after the sales contract is concluded.

Title fee

A title fee, or transfer tax, is levied when title to real estate is transferred from one owner to another. real estate from one owner to another. If you purchase a property directly from a developer, the tax rate is 0%. In other cases, the rate depends on the amount of the transaction and is divided into several levels:

• Amounts up to €85,000 are taxed at a rate of 3%.
• Amounts from €85,000 to €170,000 are subject to a 5% tax.
• Amounts exceeding €170,000 are subject to a rate of 8%.

When calculating the tax, not only the value of the property is taken into account, but also the personal information of the buyer. This allows for the distribution of the tax burden between spouses, which can lead to savings by falling into a lower tax bracket.

Value added tax

Value Added Tax (VAT) is charged on new buildings in Cyprus at a rate of 19%. Secondary real estate is exempt from VAT, and land plots are not subject to this tax at all. Buyers of new homes who intend to use them as their primary residence may qualify for a VAT reduction, lowering the rate to 5%. This benefit is available to both locals and foreigners and was introduced by amendments on June 8, 2012.

Changes in the rules for applying the reduced VAT rate

In 2023, the Parliament of Cyprus made changes to the rules for applying the reduced VAT rate. Now, the benefit is only available if the property meets certain criteria regarding value and area. To take advantage of the benefit, several conditions must be met:

• The applicant must be an individual.
• Real estate should become the primary place of residence in Cyprus.
• The applicant must not have any other property in Cyprus with a reduced VAT rate acquired within the last ten years. After this period, it is possible to receive a benefit for a new property.
• The property must be used exclusively for residential purposes, and the applicant must be the first owner after the completion of construction.
• VAT relief applies only to the first part of the area up to 130 square meters of the total area, which shall not exceed 190 square meters. The tax rebate applies only to properties up to €475 thousand in value, and only to the the first €350 thousand of the value.

These changes in rules and tax rates can significantly affect the cost of acquiring property in Cyprus, and it is important to carefully consider all conditions and restrictions in order to take full advantage of the benefits.

Obtaining VAT tax benefits when purchasing real estate in Cyprus

When purchasing real estate in Cyprus and wishing to obtain VAT tax benefits, it is necessary to follow a number of important steps. The buyer initially pays the standard VAT rate of 19%, which is specified in the sales contract. Then, an application for the exemption must be submitted along with a specific set of documents to the Ministry of Finance of the Republic of Cyprus within six months after signing the contract.

Documents required to receive the benefit

• A statement that the purchaser has not used VAT relief for the purchase of a new property in the last ten years real estate.
• Contract for the purchase of real estate.
• Architectural plans for the facility.
• Copy of passport.
• A certified copy of the building permit.
• Declaration confirming the area of the property.

If the buyer is married

In the case of marriage, a marriage certificate, a copy of the spouse's passport and a statement from the spouse that he/she has no property in Cyprus are required. from the spouse that he/she has no property in Cyprus.

Formalization of a tax exemption

The process of applying for a benefit can be carried out by the developer through a power of attorney or by a lawyer. After the buyer's rights are verified by the VAT department, the difference between the paid standard rate and the reduced rate is refunded to the buyer.

Important note

If the owner of a property ceases to use it as his or her principal place of residence before the expiration of the ten-year period, he/she must notify the VAT department of the Ministry of Finance and pay the difference between the reduced rate and the standard rate for the remaining period. It is important to follow the rules and timely It is important to follow the rules and submit the necessary documents in time to successfully complete the process.

Villa in Limassol (150 sq.m)

A villa of 150 square meters is currently for sale in Limassol. It is under of construction. This two-storey house provides comfortable living thanks to its functional layout. On the first floor there is a spacious living room with an open kitchen, a bathroom and a storage room. On the second floor there are three bedrooms, one bathroom and one shower room. This house is also equipped with solar panels and air conditioning for comfort. The villa is sold with a residence permit.

3-story villa in Limassol (264 sq.m)

Also available for sale is a 3-storey villa of 264 sqm. It is located in Limassol and offers a beautiful sea view. The first floor consists of a living room with kitchen and a bathroom, the second floor offers 3 bedrooms, one bathroom and a shower room. The basement includes a bedroom and a shower room. shower room.

Residential building in Limassol

Also for sale is a residential building in Limassol, located in the tourist area of the city.

Complex of villas on the coast of Protaras

A complex of exclusive villas, located near the picturesque coast of Protaras, perfectly combines seclusion with accessibility. There are 17 villas, united by luxurious design and private pools, built to the highest standards of modern architecture. A distinctive feature of this complex is not only the unique housing for its owners but also the stunning views of the sea and surrounding nature.

Unique villa design

Each villa is a masterpiece of architectural craftsmanship and interior design. Attention to attention to detail is at the highest level, emphasizing the elegance and comfort of each room. The villas have been designed villas were designed with the most demanding requirements in mind, providing spacious living areas, high quality materials and modern equipment. materials and state-of-the-art equipment.

Ideal location

Located on the eastern side of Limassol, in a quiet area by the Germasogeia River, the complex benefits from its location. This area is renowned for its tranquility, stunning views, and proximity to all amenities: supermarkets, cafes, shops, and banks. Residents can enjoy life away from the hustle and bustle of the city while maintaining easy access to all conveniences.

Individual design of each villa

Each villa has its own pool, surrounded by greenery and terraces for outdoor relaxation. The property is designed with special attention to creating an atmosphere of comfort and luxury. The villas vary in layout and design, allowing each client to choose a solution that suits their individual preferences and needs.

The wealth of local attractions

Proximity to the nature reserves and beaches of Protaras is one of the key advantages of the complex. Here you can enjoy the clean sea and natural beauty. Thanks to the good transport interchange residents can easily get to the center of Limassol and other key points of the city.

Modern technologies

Modern technologies and high construction standards make this complex attractive for those who value quality and comfort. The villas are equipped with everything necessary for modern living: security systems, climate control, and smart home systems.

Advantages of living in Cyprus

Villa owners have access to all the advantages of life in Cyprus, including favorable climate and high level of service. climate and a high level of service. Limassol, as an important port, provides extensive opportunities for recreation, work and investment opportunities, making it attractive to international real estate buyers.

In conclusion

Thus, the complex of luxurious villas on the shores of Protaras represents the perfect solution for those seeking high-class housing in a privileged location with stunning views and all the amenities of modern life. This project combines everything necessary for a comfortable and luxurious lifestyle at the resort, inspiring its owners to enjoy life amidst natural beauty and elegant architectural solutions.

Property tax in Cyprus

As the tax base for property tax in Cyprus, the market value of the property at the beginning of 2013 is used. value of the property at the beginning of 2013. The tax rate varies from 0.1% to 0.2%, and the specific rates and payment dates are allocated individually by local authorities. payment deadlines are allocated to local authorities on an individual basis. Penalties for non-payment of tax can be can be significant, for example in Limassol and Larnaca the penalty is 10% of the underpaid amount.

Local Authority Fees

Local Authority Fees depend on the type and size of the property and cover the costs of maintaining the area. Services may include waste collection, street lighting, and utilities, and the cost typically varies from €85 to €500 annually.

Sewer tax

The sewage tax is a mandatory payment and is calculated based on the market value of the property. It usually ranges from €100 to €200 and is paid to the local sewage management authorities.

Tax on rental income

Owners of property who rent it out are liable to pay tax on rental income. The rate depends on the income:

• Up to €19,500— no tax is charged.
• From €19,501 to €28,000— 20%.
• From €28,001 to €36,300- 25%.
• From €36,301 to €60,000- 30%.
• Over €60,001— 35%.

Capital gains tax

When real estate is sold, the seller pays capital gains tax, which is 20% of the of the profit determined as the difference between the sale and purchase price of the property. Deductions and exemptions may be available, especially for long-term ownership of real estate.

Fee for the transfer of ownership rights

Since February 22, 2021, an IPTL of 0.4% of the value stated in the contract is charged on the sale of any type of real estate.

Inheritance tax

The inheritance tax was abolished in 2000, but it was replaced by a "title fee" when transferring ownership, which is important to consider when inheriting.

The importance of consulting specialists

These taxes and fees play a key role in the real estate tax system, requiring careful attention from owners and buyers. It is advisable to seek the advice of a tax or real estate professional in the field of taxes or real estate in order to properly plan the financial obligations of real estate transactions. real estate transactions.

In conclusion

I want to emphasize that purchasing real estate in Cyprus for non-residents comes with a number of specific requirements and obligations. Citizens of the European Union can buy property without restrictions, but representatives from non-EU countries must obtain permission from the Council of Ministers, which extends the processing time for the transaction.

The restrictions pertain to the number and area of properties that a foreigner can acquire. A maximum of two properties with a total area of up to 4,014 square meters is allowed. These restrictions also apply to spouses, so additional properties can be registered in the names of children or through a company registered on the island.

When purchasing real estate, it is important to consider tax obligations. In Cyprus, there are stamp duty, title transfer fees, and VAT, which vary depending on the type of property and the amount of the transaction. It is important to remember the possibility of saving by registering the property in both spouses' names to reduce the tax burden.

In addition, it is necessary to consider international tax obligations. For example, tax residents of the Russian Federation are required to notify the Russian tax authorities about accounts in foreign banks and legal entities.

Thus, despite the existing formalities and taxes, the purchase of real estate in Cyprus remains an attractive option for foreign citizens. Cyprus offers not only favorable conditions for investments, but also the opportunity to get VAT benefits when buying a main residence, which makes this process more affordable. It is important to thoroughly prepare for the transaction, take into account all the nuances of the legislation and tax It is important to prepare thoroughly for the transaction, take into account all the nuances of legislation and tax obligations in order to make the purchase of real estate as smooth and profitable as possible.