Property Investment in Cyprus

Cyprus is a Mediterranean island State and has a developed infrastructure, attractive taxation, high quality of life, excellent health and education system, which are key reasons for moving and living on the island, but are also the basis for real estate investment in Cyprus.

The reason is that one of the most popular investment tools is buying Cypriot real estate because many families actively seek a safe haven where they can move and reside permanently, and Cyprus can offer them all this.

Today, Cyprus real estate is among the most promising investments in Europe. Its yield reaches up to 7% per annum because of its relatively low average price per square meter. In comparison with other European Union member states, this figure stands quite high: 4 percent in Greece, 3 percent in Italy, 2 percent in France, and so on and so forth.

International real estate experts believe that in the next few years, Cyprus will be the most promising and profitable European market. Such a belief can be explained by stability and attractiveness of prices, incredible variety of real estate, favorable taxation, remoteness from countries of military conflict in Europe, as well as new infrastructure projects and government initiatives for strengthening the real estate sector.

Strong points of investments in Cyprus real estate:

• Cyprus is a European Union country, a member state of the Eurozone since 2004. The Cyprus legal system is based on British law and is widely recognized as a practical and efficient system; it is understandable to investors, and fully compliant with EU regulations and directives.
• The Island of Cyprus is one of the safest places in the world, so your family and your investment is always safe.
• The climate of Cyprus is warm and mild. On the island, 300 sunny days a year – here you will feel comfortable all year round.
• Cyprus – a low-tax jurisdiction that allows you to legally optimize taxes for you, both as an individual and your business.
• No annual real estate tax in Cyprus: There is no need to pay taxes for the fact of ownership of real estate in Cyprus.
• The positive trend of real estate value growth from year to year.
• The investment in real estate of Cyprus allows getting a residence permit for the investor and his family members.
• It allows for residence in Cyprus by a foreigner to acquire the citizenship of Cyprus in case of purchasing any property and staying there for a period of over 5 years.
• Although the value of the properties in Cyprus is low compared to other countries in the European Union, the Cypriot property is the highest yielding within the European Union. Its ROI is up to 7%.

The Cyprus real estate market is stable and strong in 2023. It has been showing unprecedented and stable growth in transactions due to the inflow of tourists and foreigners who come to Cyprus for the purpose of relocation and purchasing real estate, as well as due to the huge number of infrastructure and development projects that have revived the economy and the real estate market of Cyprus: so, in 2022, buy real estate in Cyprus decided by 52% more investors than in 2021, and the average price of houses and apartments in Cyprus in 2022 increased by more than 10%.

58 percent of real estate sales were made between the local population of Cyprus while 42 percent were made by foreigners who invested in real estate in Cyprus, which is the highest percentage of outside investment among all European Union countries.

Traditionally, the biggest purchasers of real estate in Cyprus are the British, Israelis, Ukrainians, and Russians. Also in recent years, in Cyprus, there is a positive trend of growth in demand for real estate by Chinese citizens.

The most popular cities for buying real estate in Cyprus are Limassol, Larnaca, Paphos, and Nicosia.

Procedure of buying a property in Cyprus

To buy property in Cyprus, one needs to go through the following four basic steps:

1. 1. Deposit for reservation of the object. Normally it is from 1,000 to 5,000 € depending on the value of the real estate. Thus, the object is withdrawn from sale for a specified period.
   2. Signing of a sales contract. By the end of the reservation period, there should be an initial fee paid, which is about 30% to 35% of the cost of the facility. The deposit percentage differs mainly based on the demand for the facility and the stage of the construction of the facility during the time of acquisition.
   3. Registration of the contract with the Land Department.The contract, within 30 days after payment of the initial contribution has to be registered with the Land Department, where the buyer pays a stamp duty. At that stage, an application is also submitted to the Council of Ministers, seeking approval of the purchase of the property.
   4. Balance payment. The remaining 65 percent by agreement between the developer and the buyer.

Costs arising when buying a property in Cyprus

These are the key costs in relation to buying real estate in Cyprus: VAT, transfer tax, and stamp duty.

Value added tax

In the purchase of primary real estate, the VAT is charged at a rate of 5% on the first property and 19% on each subsequent property in Cyprus. For purchases of secondary real estate, no VAT is payable.

Transfer of ownership tax

The buyer gets the right of free and absolute ownership of the immovable property (“Free Hold”) upon full payment of the value of it and upon obtaining the relevant permission of the Council of Ministers of Cyprus, and the title of owner is issued in his name. When transferring ownership in the name of the buyer, the Land Department charges the registration lump sum, the amount of which depends on the market value of the acquired real estate.

Stamp duty (Registration fee in the Land Registry)

Paid by the buyer at the time of registering the sales contract, it amounts to 1.5 euros for every thousand euros of the value paid for the purchase of a property up to 170,860 euros and 2 euros – over 170,860 euros.

Services of RUE when buying property in Cyprus

• Our company’s real estate specialist chooses for viewing the objects which fully corresponds to customer’s budget and aims, whether it be investments or property for personal use;
• We can offer you both facilities, both at the construction stage – the best price on the market – and ready for entry – the possibility of early entry/operation;
• When choosing objects for our clients we also address to Cyprus banks/funds which have different real estate for sale on most favourable terms;
• We focus the client’s attention not only on the object of purchase or rent but also on the area infrastructure and the reputation of the developer, a possibility of further resale or lease;

Our company’s lawyers will advise the client on taxation for non-residents of Cyprus when buying real estate, as well as on taxes that the client will have to pay in the process of operation of the facility, real estate, and further resale. An immigration specialist, Regulated United Europe, can advise you on all questions related to obtaining a residence permit in Cyprus.

A lawyer can take part in negotiations with the developer and discuss with him the terms of purchase of the property – in order to obtain the best conditions for purchase and verify the correctness of the documentation and the financial status of the developer.