Is it worth buying real estate in Cyprus: pros and cons?

Growing interest in real estate in Cyprus

In recent years, there has been a growing interest on the part of foreign citizens to buyreal estate in Cyprus. This fact is confirmed by the increasing number of transactions in the market. However, it should be noted that Cyprus is not just an ordinary resort island, but a place with many nuances related to both life and investment in its real estate.

The positives and negatives of living in Cyprus

Let's start by analyzing the positives and negatives of living on this island. The positive aspects are highly dependent on personal preferences, so some characteristics may not suit everyone. For example, Cyprus is famous for having more than 300 days of sunshine a year, which makes it attractive for those who enjoy a warm climate. However, for people with certain medical conditions, such as high sensitivity to UV radiation or arterial hypertension, this number of sunny days can be a source of discomfort.

Taxes on real estate acquisition

Taxes on the purchase of real estate in Cyprus are quite moderate, which is one of the reasons why foreign citizens choose this island for investment. However, it is noted that the growing demand from foreign buyers also affects the tax rates, which are becoming higher as local authorities seek to fill the budget funds.

Obtaining citizenship and restrictions

Another critical aspect is the possibility of obtaining Cypriot citizenship, which is greatly simplified after the purchase of real estate. Not only buyers, but also their immediate relatives can obtain a visa. However, it should be taken into account that Cyprus is historically divided into two parts: the northern territory is controlled by the Turkish Republic of NorthernCyprus, and the southern territory is controlled by the Greek Republic of Cyprus. This circumstance sometimes causes local residents to be concerned about potential conflicts.

Diversity of the real estate market

The real estate market in Cyprus offers a variety of properties ranging from residential houses to apartments and plots of land. Prices can vary considerably depending on the region and type of property. For example, the cost of housing in the south, where there are the most foreigners, can differ significantly from the prices in the north. Researching the real estate market is a key step in finding the most suitable option.

Restrictions for foreign citizens

It is important to understand that there are certain restrictions on buying real estate for both locals and foreigners. Foreign buyers can only purchase certain types of property such as:

• residential complexes
• individual houses

while commercial properties can be more difficult to acquire. It is also worth bearing in mind that taxes may vary depending on the type and location of the property.

Financial aspects and loans

Mortgages and installment loans are available for foreigners, making the buying process more affordable. Many banks in Cyprus offer different lending programs, so you should read the terms and conditions carefully before making a decision.Real estate insuranceis also an important aspect that will protect your investment from unforeseen situations.

Stages of purchasing real estate

If you decide to invest in Cypriot real estate, you will have to go through several stages, starting with the selection of the property and ending with the titling of the property. You will need to:

• open a bank account
• book an apartment or house
• pre-sign

Be sure to check the legal cleanliness of the selected object to avoid problems in the future. After signing the main sale and purchase agreement, you will receive a document confirming your rights to the property.

Remote real estate purchase

Interestingly, it is possible to buyreal estate remotely, which makes the process even more convenient for foreign investors. It is also worth thinking about how and where you plan to rent out your property, if this is part of your investment plans.

Conclusion

In conclusion, for many people Cyprus is an attractive destination to buy a home, but all the previous nuances should be taken into account. After analyzing the pros and cons, you will be able to make an informed decision that best meets your requirements. Questions about various aspects of living and real estate on this island often arise, so it is useful to discuss them in advance with experts or read reputable sources to make an informed choice.

Real estate in Cyprus

Real estate in the northern part of Cyprus offers more reasonable rates in comparison with the southern territory, and also pleases with a comfortable climate. However, on the world platform, this part of the island remains little known and not internationally recognized. If you are still in search of the perfect home here, we strongly recommend to understand the peculiarities of buying real estate in Cyprus.

Types of real estate

The real estate market in Cyprus is generally similar to what is offered in other markets. You will have access to a variety of different types of accommodation such as:

• apartments
• houses
• villas
• residential complexes
• parcels of land

Commercial real estate includes offices and retail space. You can also choose primary residences, which are new buildings from developers that require only minor cosmetic repairs before moving in. Secondary housing is apartments and houses that have been used before.

Location selection

When choosing a location to buy a property in Cyprus, it is extremely important to consider your finances. Even if you have sufficient funds, you should not delay:real estate market prices continue to risewhich can have a negative impact on your options. In addition, there is a limited amount of land available on the island, which narrows down your choices. There is always the risk that a villa you like may be purchased by another buyer at short notice.

Housing prices

As for the prices of housing in Cyprus, you need to keep in mind the additional costs associated with the purchase. It is recommended to add approx.10%to the declared value, which includes taxes and various charges, including VAT.

Political and economic changes

Cyprus has witnessed various political and economic changes in recent years. For example, in 2020, due to the COVID-19 pandemic, the citizenship by investment program was temporarily suspended, resulting in a decrease in the number of sale and purchase transactions. Despite this, southern Cyprus continues to be an attractive investment destination.

Recent years have seen a resurgence of activity in the market, as well as the resumption of a program for investors seeking citizenship through real estate investments.

Renting and buying a home in the southern part of Cyprus

Now let's take a look at the approximate rates for renting and buying a home in different towns in the southern part of Cyprus:

• Nicosia:
  • In the center (€ per month): 1 bedroom - 640, 3 bedrooms - 1230.
  • Outside the center: 1 bedroom - 530, 3 bedrooms - 976.
• Limassol:
  • In the center: 1 bedroom - 1,580, 3 bedrooms - 2,560.
  • Outside the center: 1 bedroom - 1189, 3 bedrooms - 2115.
• Larnaca:
  • In the center: 1 bedroom - 967, 3 bedrooms - 1670.
  • Outside the center: 1 bedroom - 669, 3 bedrooms - 1,248.
• Pathos:
  • In the center: 1 bedroom - 836, 3 bedrooms - 1578.
  • Outside the center: 1 bedroom - 597, 3 bedrooms - 1270.

These figures are approximate and may vary, but they give an indication of the current state of the housing market in South Cyprus. When preparing to invest in real estate in Cyprus, it is important to carefully analyze all the nuances and follow the current trends, so that your choice will be not only successful, but also profitable.

What is happening in the Cyprusreal estate market in 2023?

Let's take a look at the current situation with prices and demand levels.

Rules for the acquisition of real estate by foreigners

The purchase of real estate in Cyprus for foreign nationals is governed by various factors, largely depending on the nationality of the buyer. The island is part of the European Union (EU), which creates certain advantages for its citizens and citizens of EU countries. If you are interested in buying real estate in North Cyprus, you should take into account that local laws and conditions can vary significantly. For a better understanding of the legal framework, it is worth reading the “Law on the Acquisition of Real Estate and Long Term Leases (by Foreigners) as amended”.

Who can buyreal estate in Cyprus?

South Cyprus has created a variety of favorable conditions to attract foreign investors and increase the flow of capital into the economy of this amazing island. Foreigners, aware of the opportunities offered by the real estate market here, are actively investing, even despite certain changes in the political and economic environment.

Restrictions for foreign buyers

However, there are certain restrictions. If you are not a citizen of a European Union country, you will need to obtain authorization from the Council of Ministers of Cyprus. This process is not too complicated:

• A check will be made for legal or financial impediments;
• Find out if you already have real estate on the island.

No such verification is required for EU citizens.

Types of real estate for foreign citizens

As for the types of real estate available to foreign citizens, representatives of non-EU countries are allowed to purchase no more than two properties. These can be:

• Land and apartments;
• House and commercial space.

Under certain conditions - a total area not exceeding 4014 square meters and necessarily with prior authorization from the Council of Ministers. It is also important to note that the purchase of real estate in Cyprus can open the way to obtaining a residence permit, and there are no such restrictions for EU citizens.

State support and financial assistance

Addressing the existing housing problems, the local government plans to allocate a substantial amount of77 million eurosas part of financial aid.

Tax aspects of acquiring real estate

Also, the tax aspects associated with real estate in Cyprus should not be overlooked. As already mentioned, buying an apartment or a house can be the first step towards citizenship. Although the process can take a considerable amount of time, it is usually quite simple compared to similar procedures in other European countries. Given all the taxes and fees that will need to be paid in addition to the cost of the property itself, it is advisable to familiarize yourself with the conditions in advance to avoid unpleasant situations.

Result

Thus, in 2023, the real estate market in Cyprus continues to be interesting for foreign buyers and shows dynamic development, offering many investment opportunities.

VAT on acquisition of real estate

When you purchase a new home, it is important to consider that VAT may be charged both on purchases of primary properties and in some cases on secondary dwellings, especially if the property in question has not previously been subject to the tax.

The standard VAT rate is 19%. However, it is possible to take advantage of tax exemptions. In a situation where you are a first-time homeowner, you will only have to pay 5% of the value of your home. This rule applies to all buyers, regardless of their nationality, whether they are EU citizens or not.

Terms and conditions of the tax credit

It should be emphasized that the above exemption applies only to natural persons who have reached the age of majority and the property purchased must be the main place of residence in South Cyprus.

• The area of the dwelling shall not exceed 200 square meters.
• As suitable objects can be considered both apartments and houses in the process of construction or fully ready for occupancy.
• After ten years from the date of the first purchase, the same buyer again has the opportunity to purchase a home at a reduced rate of 5% if the new home is registered as their primary residence.

Stamp duty and title fee

As for stamp duty, it must be paid within one month of the transaction. The amount of stamp duty depends on the value of the property. A rate of 0.15% applies to the first €170,860, while the amount above this value is taxed at 0.2%.

You must also pay a title tax, which is levied on secondary real estate transactions. This tax is calculated depending on the price of the property:

• There is a 3% charge on the first €85,000.
• For amounts between €85,000 and €170,000 - 5%.
• For anything above €170,000 - 8%.

If the transaction involves shared ownership, reduced tax rates may apply.

Capital gains tax

According to the legislation, capital gains tax is declared and paid by the seller of the real estate.

Real estate insurance for remote purchase

In order to ensure the safety of your future property, especially if you plan to purchase it remotely, it is worth considering the need to take out an insurance policy for both the transaction and the property itself. Information on insurance terms and conditions can be obtained from various insurance companies in South Cyprus. Usually financial institutions involved in real estate transactions already have relationships with certain insurers and it is wise to take advantage of their recommendations and experience.

Expenses for property maintenance

Property maintenance costs in Cyprus will depend on how much time you intend to spend on this beautiful island. If your intention is to live in the property permanently, be prepared to cover the costs of services such as:

• electricity;
• water;
• sewer.

You will also need funds for food and other everyday purchases. In this situation, you will not have the need to patrol the facility at night, which can significantly reduce costs. A possible option for reducing energy costs could be tosolar panelsconsidering Cyprus is famous for its sunny days.

Municipal tax and repairs

Regardless of where you choose to live, you will still have to pay an annual feemunicipal tax. It is also worth considering the possible costs of home repairs and maintenance. All of these aspects can play an important role in the overall budget for the property. It may be worth considering insurance to minimize financial risks?

Cypriot citizenship through investment

If we talk about obtaining Cypriot citizenship through investment in real estate, then when buying a home with a value of from300,000 eurosyou will have the opportunity to obtain a permanent residence permit. Investments can be made both in residential real estate and in other types of real estate such as:

• commercial space;
• offices;
• hotels.

The total amount must therefore be at least €300,000. It is important to prove that the funds were transferred from a foreign account, whether it is your personal bank account or the account of your spouse, if he/she is designated as a dependent.

Other options for obtaining a permanent residence permit

There is another option to obtain a permanent residence permit through:

• investment in the authorized capital of a new company registered in Cyprus;
• increasing the capital of an existing company by an amount not less than300,000 eurosprovided that the company is active and has at least five employees.

Investments in mutual funds

Additionally, you may invest €300,000 in mutual funds of Cypriot collective investment organizations, but these funds must remain in accounts in the Republic of Cyprus itself. However, it is worth bearing in mind that if for any reason you decide to withdraw your investment, your immigration permit issued under paragraph 6 of the rules on foreigners and immigration will be revoked. Therefore, it is crucial for investors to thoroughly understand all the risks and opportunities associated with buying property in Cyprus and the citizenship process. It is important to carefully analyze all the conditions to avoid unpleasant situations in the future.

Investments and transaction processing

The only way to ensure that high-quality information is retained is to immediately invest in another project that requires a similar or greater financial investment.

Ways to buyreal estate in Cyprus

Purchasing property in Cyprus can be done in two ways: to come to the island in person or to carry out the transaction remotely, without being physically present. Some real estate offices offer organized events in Cyprus for prospective buyers, where you can spend time looking at several properties, ask questions and, if you wish, together with the agent to explore the options selected by attention.

The online buying process is possible through specialized websites and platforms. However, it is strongly recommended to verify the reliability of the property through personal inspection before signing the final agreement.

Choosing a real estate property

As mentioned above, property selection can be done either during a personal visit to Cyprus or remotely. For short trips to the island, a visa is not required if the plan is to return within 90 days.

To speed up the transaction process, it is worth considering working with a local real estate agent. The license of the agency confirms its legitimacy, so it is important to check this aspect carefully.

Reservation of real estate

When a buyer settles on a particular property, it is necessary to reserve it. This requires a deposit of 1% to 2% of the total price, which will confirm the seriousness of the buyer's intentions. If the deal is not finalized for some reason, the deposit will not be refunded, which should be considered a serious penalty.

If the transaction becomes impossible due to the fault of the seller, the deposit will be fully refunded to the buyer.

Opening a bank account

To reserve a facility, you must open an account with one of the Cypriot banks such as Alpha Bank, Astra Bank, Bank of Cyprus, Eurobank or Hellenic Bank. Please note that citizens of Russia and Belarus may be refused to open an account, but this is not a barrier to transferring money from another bank account.

Real estate due diligence

Before purchasing any property, it is important to check its legal cleanliness carefully. When buying a primary property, the developer confirms that all documents are in order and the property is free of debts and lease obligations.

In cases involving secondary residences, due diligence should be conducted by a qualified lawyer who should be hired with the appropriate license in mind. Working with government agencies, the lawyer will be able to confirm that the property is ready for sale and make sure that there are no legal obstacles.

Conclusion

Thus, the process of purchasing real estate in Cyprus requires careful and thorough approach, and it is necessary to follow all the steps to make the transaction safe and transparent. Each step, from the selection of the property and its reservation to the opening of a bank account and legal due diligence, plays an important role in the successful completion of the entire procedure.

Registration of real estate sale and purchase agreement

In the process of concluding a real estate sale and purchase contract, it is essential to carefully spell out all the details, including the exact address of the property, the price of the transaction, the full names of all parties involved, and the necessary details of the rights that are transferred to the buyer with the purchase. According to the website of the Department of Civil Registry and Migration, such contracts can be drafted in both Greek and English. This greatly simplifies the process for foreign nationals.

Title Deed

The main document of title is the title deed, which contains unique information about the property and its owners. With the help of this document, the owner gets the right to carry out any legal transactions with real estate.

Transaction registration

After signing the sale and purchase agreement, the lawyer representing the buyer must prepare a formal application for the Cabinet Office, attaching a copy of the passport. Payment of stamp duty is also required. Within two months after the transaction is finalized, the lawyer registers the contract with the Land Registry, which is a crucial step to protect property rights.

Obtaining permits

When the buyer has paid off the seller in full, it is time to obtain approval from the Cabinet of Ministers to purchase the property. To clarify the list of required documents, it is worth referring to available sources of information.

Remote acquisition of real estate

Regarding the remote purchase of real estate in Cyprus, the process is as follows:

• The prospective buyer executes a power of attorney in the attorney's name.
• The lawyer acts on behalf of the buyer, carrying out all necessary actions.
• The specialist collects the documents, executes the transaction and registers the object, taking into account the interests of the client.

However, it is worth bearing in mind that a solicitor does not have the authority to act on your behalf to apply for a residence permit - this power remains with you.

Renting out real estate

In addition to obtaining a residence permit, property owners have the option of renting out their properties. However, it is important to remember the specifics of the rental market in Cyprus, especially for houses and apartments built before December 31, 1999. This category of property is subject to strict regulation and tenants' rights are more effectively protected. For example:

• If a low value is spelled out in the lease, it will be difficult for the tenant to raise it to market level.
• Owner-initiated eviction of a tenant can also be difficult.

Recommendations

Thus, it is critical to consult with a lawyer who specializes in real estate matters to avoid possible negative consequences. To reduce risks, it is advisable to consider purchasing and subsequently leasing properties built after January 1, 2000. Such properties are no longer subject to strict regulation by the rental market, which gives owners more flexibility. This approach will not only help protect your interests, but also ensure optimal management of your property.

Conclusion

Buying real estate in Cyprus is becoming increasingly popular among foreigners, as evidenced by the increase in the number of transactions in recent years. This island, although not without its peculiarities, offers many opportunities for those who seek to invest in their future. To conclude this article, I would like to summarize some important conclusions and recommendations for potential buyers.

Pros and cons of living in Cyprus

Analyzing the pros and cons of living in Cyprus, I realized that each aspect should be considered in the context of personal preferences and life circumstances. For example, on the one hand, there are indeed almost 300 days of sunshine a year, but on the other hand, high temperatures may not suit those who are sensitive to heat. Low property taxes attract many investors, but as practice shows, this situation may change as demand for housing increases and local authorities may reconsider tax policy.

Real estate value

As for the cost of real estate, you need to remember that prices continue to rise. Therefore, if you have found a suitable property, you should not delay your decision to buy. Investing in Cypriot real estate can be a sound investment, but for this you need to carefully consider all the nuances. Be prepared to take into account the additional costs of registration and tax payments, which can amount to approx.10%of the total cost.

Choosing a place to buyreal estate

Choosing where to buy a property also matters. Each city in Cyprus has its own advantages:

• Nicosia- is a capital city with a rich history;
• Limassolis known for its resort lifestyle;
• Larnacawill be pleasantly surprised by its beaches;
• Paphoswill delight archaeology buffs.

Research the offerings and determine which location is the best fit for you.

The process of buying real estate

And, of course, it's important to understand the process of buying real estate. Don't forget the legal aspects, opening a bank account and all the necessary procedures. Hire qualified professionals to verify transactions and documents to avoid possible risks.

Result

In conclusion, Cyprus can be a great place to live and invest if you approach the process with intelligence and preparation. With the right approach, your dream of owning your own home on this beautiful island can become a reality and you can enjoy all that it has to offer. Good luck in your Cyprusreal estate journey!