If you are planning to buy a house for the first time on the island of Cyprus, you may have many questions and concerns about the process, the costs, and the legal aspects involved. This guide will provide you with some useful information and tips to help you make an informed decision and avoid potential pitfalls.

## Legal fees involved

When buying a property in Cyprus, you will need to hire a lawyer to represent your interests and handle the legal paperwork. The lawyer will also apply for the necessary permissions from the Council of Ministers, which is required for non-EU citizens who want to buy property in Cyprus. The lawyer's fees may vary depending on the complexity of the transaction, but they usually range from 1% to 2% of the property value. You should always choose an independent lawyer who is not affiliated with the seller, the developer, or the estate agent.

## Things to consider when buying a house

Buying a house is a big investment, so you should do your due diligence before signing any contracts. Here are some things to consider when buying a house in Cyprus:

- Location: Cyprus is a small island, but it has different regions with different characteristics, such as climate, culture, infrastructure, and amenities. You should research the area where you want to buy a house and visit it in person to get a feel for it. You should also check the proximity to the sea, the airport, the shops, the schools, and other facilities that are important to you.

- Type: Cyprus offers a variety of property types, such as apartments, villas, townhouses, bungalows, and traditional stone houses. You should decide what type of property suits your needs, preferences, and budget. You should also consider the size, layout, design, and condition of the property, as well as the quality of construction and materials used.

- Title deeds: One of the most common problems that buyers face in Cyprus is the delay or absence of title deeds. Title deeds are the legal documents that prove ownership of a property. Without them, you may face difficulties in selling, transferring, or mortgaging your property in the future. You should always check if the property you want to buy has a clear title deed or if it is in the process of being issued. You should also check if there are any mortgages or encumbrances on the property that could affect your rights as an owner.

- Maintenance: Buying a house also means taking care of its maintenance and upkeep. You should factor in the costs of repairs, renovations, utilities, insurance, and taxes when calculating your budget. If you are buying a property in a complex or a development, you should also inquire about the communal fees and services that are provided by the management company or the owners' association.

## Access to finance in Cyprus for a new house

If you need a mortgage to finance your property purchase in Cyprus, you will have to apply for one from a local bank or an international broker. The mortgage conditions may vary depending on your nationality, income, credit history, and property value. Generally speaking, you can expect to pay an interest rate of around 3% to 4%, a loan-to-value ratio of up to 70%, and a repayment period of up to 25 years. You will also have to provide some documents and evidence to support your application, such as:

- Passport or ID card

- Proof of income (payslips, tax returns, bank statements)

- Proof of address (utility bills)

- Property valuation report

- Sales contract

- Lawyer's confirmation letter

- Council of Ministers permission (for non-EU citizens)

You should always compare different mortgage offers and terms before choosing one that suits your needs and circumstances.

## Taxes involved in purchasing a house in Cyprus

When buying a property in Cyprus, you will have to pay some taxes and fees that are associated with the transaction. These include:

- Transfer fee: This is a one-time fee that is paid to the Land Registry Office when transferring the ownership of a property from the seller to the buyer. The transfer fee is calculated based on the market value of the property at the time of purchase. The rates are as follows:

| Property value (€) | Transfer fee (%) |

| ------------------ | ---------------- |

| Up to 85,000       | 3                |

| From 85,001 to 170,000 | 5                |

| Over 170,000       | 8                |

However, if you are buying a new property from a developer who has already paid VAT on it, you are exempt from paying the transfer fee. Alternatively, if you are buying a resale property that is subject to VAT (19%), you can choose to pay either the transfer fee or VAT.

- Stamp duty: This is another one-time fee that is paid to stamp and register the sales contract at the Land Registry Office. The stamp duty is calculated based on the contract value of the property. The rates are as follows:

| Contract value (€) | Stamp duty (€) |

| ------------------ | -------------- |

| Up to 5,000        | 0              |

| From 5,001 to 170,000 | 1.5 per 1,000    |

| Over 170,000       | 2 per 1,000      |

The stamp duty must be paid within 30 days of signing the sales contract.

- VAT: This is a tax that is added to the price of a new property that is sold by a developer or a company. The standard VAT rate in Cyprus is 19%, but there are some exceptions and reductions for certain types of properties and buyers. For example:

  - If you are buying your first permanent residence in Cyprus, you can benefit from a reduced VAT rate of 5% for up to 200 square meters of covered area. You will have to submit an application and a declaration to the VAT office and prove that you intend to use the property as your main and permanent home for at least 10 years.

  - If you are buying a property that is used for social policy purposes, such as affordable housing, nursing homes, or student accommodation, you can also benefit from a reduced VAT rate of 5%.

  - If you are buying a property that is more than five years old and has been used before, you are exempt from paying VAT.

- Capital gains tax: This is a tax that is paid on the profit that you make when selling a property in Cyprus. The capital gains tax rate is 20%, but there are some exemptions and allowances that can reduce your taxable amount. For example:

  - If you are selling your main residence that you have owned and lived in for at least five years, you are exempt from paying capital gains tax up to €85,430.

  - If you are selling any other property that you have owned for at least five years, you are exempt from paying capital gains tax up to €17,086.

  - If you are selling a property that you have inherited, you are exempt from paying capital gains tax up to €85,430.

  - You can also deduct some expenses from your capital gains, such as acquisition costs, improvement costs, inflation indexation, and legal fees.

## Other fees involved when purchasing a house in Cyprus

Apart from the taxes and fees mentioned above, there are some other costs that you may incur when buying a property in Cyprus. These include:

- Valuation fee: This is a fee that is paid to a licensed valuer who assesses the market value of the property for mortgage or insurance purposes. The valuation fee may vary depending on the size and type of the property, but it usually ranges from €150 to €500.

- Mortgage arrangement fee: This is a fee that is paid to the bank or the broker who arranges your mortgage loan. The mortgage arrangement fee may vary depending on the lender and the loan amount, but it usually ranges from €500 to €1,000 or 0.5% to 1% of the loan amount.

- Mortgage registration fee: This is a fee that is paid to the Land Registry Office when registering your mortgage deed. The mortgage registration fee is calculated as 1% of the loan amount.

- Insurance fee: This is a fee that is paid to an insurance company who provides coverage for your property against fire, theft, natural disasters, or other risks. The insurance fee may vary depending on the value and location of the property, but it usually ranges from €100 to €300 per year.

- Communal fees: These are fees that are paid to the management company or the owners' association who maintain and provide services for the common areas and facilities of a complex or a development where your property is located. The communal fees may vary depending on the size and type of the property and the services offered, but they usually range from €50 to €200 per month.

## Conclusion

Buying a property in Cyprus can be an exciting and rewarding experience, but it also requires careful planning and preparation. You should always do your research, consult with professionals, and follow the legal procedures to ensure a smooth and successful transaction. You should also be aware of all the costs involved and budget accordingly.

We hope this guide has given you some useful information and tips on buying a house for the first time on the island of Cyprus. If you have any questions or need any assistance, please feel free to contact us at any time.

Sources:

- Buying Property in Cyprus: The Complete Guide - Cyprus Property Guides

- Property In Cyprus: The Property Buyers Essential Guide - Expatra

- Buying property in Cyprus as a foreigner: UK guide - Wise