Innovative property investments
Investment Property in Cyprus
Buying Guide
Buying Finances
Securing a mortgage
The central bank of Cyprus has instructed all Cypriot lenders that a minimum deposit of 30% is required to secure a mortgage.
Some lenders however, assess each client’s borrowing requirements on an individual basis and in certain circumstances, a lower deposit may be arranged, subject to status.
To get a mortgage with a Cypriot lender, you will typically have to provide the following: employment status (employer’s details, your salary, pay slips, and length of time with employer), passport details, financial details (existing debts, mortgages and regular outgoings), bank reference and three months’ statements, purchase agreement, details of any deposit made to the property vendor.
You will also have to open a Cypriot bank account, probably with the bank who is lending you the mortgage.
Interest rates in Cyprus are around 7%.
Real estate transfer taxes
Real estate transfer taxes vary according to the value of the property.
The rates are 3% for properties with a value up to 50,000 CYP, 5% 50,001 CYP to 100,000 CYP and 8% for 100,001 CYP and over.
If the property is in joint names for example a husband and wife or two individuals, the purchase value is divided into two parts which results in lower transfer fees.
Stamp duty rates
The purchaser is liable for stamp duty at the rate of 1.50 CYP per 1,000 CYP up to the value of 100,000 CYP.
Thereafter the rate is 2 CYP per 1,000 CYP. This should be paid within 30 days of signing the contract.
Other costs
Other property ownership costs include service charges for apartments (around 100 CYP to 300 CYP per year) electricity, water and sewerage charges.
The immovable property tax
One anachronistic property tax on the statute in Cyprus is the Immovable Property Tax.
The registered owner of a property is liable for this annual tax which is based upon the value of the property as at 1st January, 1980.
Any property which was valued at less than 100,000 CYP on this date is exempt from the tax.
But as prices have only hit this level fairly recently, there are virtually no apartments and very few villas that are actually eligible to pay this tax.
Taxes when selling
When selling a property, capital gains tax is charged at 20% of the chargeable gain.
The first 10,000 CYP is exempt.
This exemption limit goes up to 50,000 CYP if the vendor has lived in the property continuously for the previous five years.
There are further allowances in relation to transfer fees, inflation and improvements made to the property, but the total exemption cannot exceed 50,000 CYP.
Investment returns
A recent survey on rental property in Cyprus by www.holiday-rentals.co.uk says owners manage to rent out their Cyprus holiday homes for 18 weeks per year on average, providing a 6.3% return on investment based on the average purchase price of 134,000 GBP and the average rental rate of 470 GBP per week.
The survey also showed that capital growth in Cyprus has been high.
The majority of owners bought between two to four years ago and of those who said they knew the current value of their property, 40% said it had increased between by 30 to 60%, and 30% said it had increased between 10 to 20%.
The average purchase price respondents had paid was 134,000 GBP, with 40% having personally financed the purchase, 33% taking mortgages against their main residence and 27% holding a mortgage in Cyprus.
Key facts
- Generally a minimum deposit of 30% is required to secure a mortgage
- If the property is in joint names the purchase value is divided into two parts resulting in lower transfer fees
- The purchaser is liable for stamp duty, payable within 30 days of signing the contract
- Stamp duty is charged at 1.50 CYP per 1,000 CYP up to the value of 100,000 CYP; thereafter the rate is 2 CYP per 1,000 CYP.
- Allow for the costs of service charges for apartments (around 100-300 CYP per year) electricity, water and sewerage charges
- Capital gains tax is charged at 20% of the chargeable gain, with the first 50,000 CYP exempt on properties in which the vendor has lived continuously for the previous five years or the first 10,000 CYP is exempt for ownership of fewer years
- Holiday homes are typically rented out for 18 weeks per year, providing a 6.3% return on investment
- Property has appreciated by 10-40% in the last two to four years
Downloadable Reports and Documents
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