The core of the law that governs and regulates real estate in Cyprus is the Immovable Property (Tenure, Registration and Valuation) Law, Cap 224, and in relation to this, the main laws that deal with real estate in Cyprus are:
General provisions in connection with real estate law can also be found in:
The positive trend in the sales of real estate in Cyprus appears set to continue during 2023, facilitated by foreign buyers, originating from both EU and non-EU countries. This is accompanied by rising prices for sales and rentals, driven by the high demand and the increased cost of building materials.
The financial environment appears, at present, to be affected by some important fiscal parameters. The growth rate in GDP in 2023 is expected to be around 3% – a healthy increase – although there was a greater increase of 5.7% in 2022, coming as a reaction to the decline of 2020. Inflation is expected to improve in 2023 and drop to around 4%, compared to 8.1% in 2022.
It should be noted that in 2022 there was a 30% increase in real estate sales transactions (contracts deposited at the Land Registry) with Limassol at the top of the table, followed by Paphos. Of the 13,409 real estate sales transactions in 2022 (the highest number since 2008), 5,928 (44%) concern foreign buyers. This significant increase sends the message that foreign buyers may perhaps have a strong and healthy presence in 2023 as well. It is also notable that while in 2022 50% of foreign buyers were from within the EU, in January 2023 three out of four buyers were from outside the EU.
The most significant real estate deals were sales/purchases of apartments for investment (long-term or short-term leases) and buildings that consist of apartments and/or shops.
Over the past few years, the COVID-19 pandemic has affected real estate in Cyprus in that it seems to have had some economic repercussions in isolated cases where companies or individuals have not had the turnover they expected. There is little sign of this today.
Depending on the methodology used, it appears that the various real estate price indices place the increase during the last 12 months in the region of 6–12%. Despite these price increases, real estate prices in Cyprus are favourable when compared with prices for similar properties in neighbouring and European countries.
Comparing prices with those in past years, it should be stressed that they are still near what they used to be in 2010, when the price indices were launched. Another area of the real estate sector covers rentals. The increase in rentals in 2022 was more noticeable than the increase in sales prices. This is mainly justified by increased demand from Cypriots as well as foreigners.
The use of blockchain technology has modernised the process of buying and selling real estate in Cyprus. This technology has obviously had an impact on the industry and will continue to have an impact in the coming years.
The real estate industry has traditionally been a slow-moving one, with significant delays and high transaction costs. However, with the advent of blockchain technology, the process of buying and selling property has been revolutionised. The technology enables real estate sellers in Cyprus to confirm the existence of payments instantly, without the need for intermediaries such as banks, and provides significantly lower transaction costs.
The new technology requires real estate lawyers to have a deep understanding of the latest trends and innovations in the field.
Since the discontinuation of the Cyprus Investment Programme at the end of 2020, most of those wishing to invest in real estate in Cyprus have been individuals and businesses that wish to relocate to Cyprus, due to various government initiatives (eg, the fast-track permanent residence permits granted to individuals and schemes for relocating third-country nationals of companies with substantial operations in Cyprus).
Also of note is the fact that in the past year, the Cyprus government has given certain professionals and individuals secured access to the government systems, through an online identification process. Having electronic access to the land registry office, tax authorities and immigration has made the process of assisting immigration into Cyprus much easier and more user-friendly, and has had a really positive impact on real estate transactions.
According to the current rules and regulations, acquisition of property by aliens (non-Cypriot citizens by nationality) is allowed with some restrictions/conditions. Aliens may acquire:
Offshore businesses may also acquire premises for their business or as a residence for their foreign employees.
The same treatment and restrictions applied to buying freehold properties are applied to the acquisition of leases of more than 33 years’ duration.
EU citizens and legal entities established in EU countries that have their headquarters and registered office in Cyprus, do not require permission to buy immovable property. EU citizens are treated as local residents, enabling them to purchase property without any restrictions, as they do in their homeland. They may also register as many properties as they wish in their name.
There is nothing more important than title deeds in the island’s legal system. Whoever has the title deeds has the full right to dispose of real estate, in terms of selling, inheriting or rebuilding it. However, it is very important to take into consideration building zone restrictions. For planning purposes, the island is divided into various zones. These include residential, agricultural, animal rearing, industrial, green belt, and tourist zones. It is therefore important for a buyer to ensure that the land they intend to buy is in an appropriate zone.
If a buyer does not buy in an appropriate zone:
A transfer of a title deed can only be executed through the Department of Land and Surveys in each district in Cyprus. The Land Registry Department is divided into six District Land Offices, each having jurisdiction to deal with the registration and transfer of land located in its geographic area. Every title deed of every property is registered and recorded in the system of the department and property owners can obtain details regarding their property from a department in any district. The Land Registry Department has exclusive responsibility and provides the means and instruments for the establishment of rights of ownership in immovable property; surveys and cartography of Cyprus; the registration, transfer and mortgage of immovable property; the valuation of properties; and the administration of government land.
Property owners in Cyprus do not commonly insure their properties, although it is advisable for them to insure their property/ies against any act of God, earthquakes and any damage due to natural causes. The COVID-19 pandemic forced the implementation of new procedures governing the transfer of title deeds that are still in place today. More specifically, the digitalisation of the system, the use of electronic applications to obtain documents and information, and the flow of cases became much easier. Regarding the certification of documents by clients who were absent abroad, this continued to apply, with the difference that there was more flexibility in the acceptable period for the certification of documents by the Embassy of Cyprus in the respective country abroad.
As in all countries, real estate due diligence is necessary in order to make sure the property meets certain requirements.
A real estate lawyer will be able to verify both the seller and the property before the sale takes place so that the buyer will face no difficulties in this respect.
The most important step when conducting real estate due diligence is to verify the property with the Cypriot Land Register. This contains all the relevant information about the property title and if any lease contracts, mortgages, encumbrances or other debts exist. Another key factor when purchasing real estate property in Cyprus is to verify if the building complies with all the construction regulations and has obtained all the necessary construction permits.
In the Republic of Cyprus, it is possible to purchase either a ready-made business with certain profitability, equipment and the necessary licences, which will minimise any bureaucratic delays, or to purchase commercial real estate to start a business from scratch.
There are extensive zoning and land use planning laws and regulations which regulate the level and intensity of economic development in different geographical areas of the country. Zoning laws are quite strict and relevant permits or licences must first be obtained from the appropriate authorities prior to the commencement of any construction or development work. Within city limits, the relevant authority is the local municipal council, and in rural areas, the relevant authority is the local district officer of the Department of Town Planning and Housing.
Before deciding to grant the town planning permit, the planning and building authorities are obliged to take every relevant factor into account and to invite every person affected by the intended development to a public hearing. The Town Planning and Housing Law provides that the town planning authority should take into consideration the provisions of the applicable development plan and any other essential factor, excluding external factors. A town planning permit that is issued without regard for the rights of neighbours entitles them to invoke that they have a legitimate interest to apply for the annulment of the permit. The town planning authority is obliged by law to ensure that the independent operation, possession and enjoyment of the development and/or of any of its units will not substantially affect the amenities of the area or the neighbouring properties.
The law provides the right to every affected person to file a recourse to the administrative court both against the town planning and the building permit if the person believes that the decision of the authorities is affecting their property rights as an owner.
The most important areas of law for an investor to consider when purchasing real estate are the following:
Nevertheless, all the laws mentioned in 1.1 Main Sources of Law are essential and important when purchasing and selling an immovable property in Cyprus.
As part of planning permit procedures, the authorities may impose several conditions to prevent pollution in an application for planning permission (eg, wastewater treatment where connection to the sewerage system is not possible).
Environmental contamination is classified as a criminal offence under the Control of Water Pollution Law (L 106 (I)/2002), as amended. Section 6 of the law identifies a range of offences committed by anyone who accidentally or purposefully contaminates water reserves, water beds, rivers or coastal areas. The penalties include monetary fines and even imprisonment in severe cases.
The government of the Republic of Cyprus, through the Urban Planning Department, has proceeded to divide the land into various urban planning zones which have been categorised and which permit residences to be built in some areas, offices in others, etc. This means that the legal representative of the investor, when executing the due diligence check on the property, will be in a position to notify the investor about any limitations. See also 2.5 Typical Representations and Warranties.
Article 23 (4) of the Constitution allows the republic, the community assembly, the municipalities and legal entities of public law and utilities to order the compulsory expropriation of property for the fulfilment of public utility purposes. The listing of the authorities entitled to expropriate property has caused problems in the past, but in a recent decision, the Supreme Court ruled that communities cannot have an autonomous right of expropriation because they are not legal persons governed by public law within the meaning of Article 122 of the Constitution.
Where the whole property is subject to compulsory acquisition, the amount of compensation will be assessed with reference to the market value of the property as at the date of publication of the notice of acquisition.
When purchasing an immovable property in Cyprus, both the seller and purchaser need to cover their own expenses arising from the sale. The seller will be obliged to settle in full the municipal taxes and the capital gains taxes arising from the sale. On other hand, the purchaser will be requested to cover the stamp duties for the legalisation of the sale agreement and the transfer fees that will be calculated by and are payable to the Land Registry (Department of Land and Surveys).
In the case of the purchase of shares in a legal entity in Cyprus (a company), the seller will be asked to declare in their tax declaration the profit from the sale when they pay their annual income tax. The purchaser will be obliged to cover the legalisation fees (stamp duties) and the real expenses that need to be paid to the Registrar of Companies for the execution of the change in ownership status of the company.
There are no restrictions on foreign investors acquiring real estate in Cyprus and every foreigner has the right to purchase and/or invest in Cyprus, subject to permission from the Council of Ministers for non-EU nationals.
Mortgages or liens may be registered against any real property (commercial or residential), as defined by the Immovable Property (Tenure, Registration and Valuation) Law, as security for the payment of a debt owed by the owner of the property in question or for the performance of an obligation by the same.
Liens or legal mortgages over any immovable property may be created by, or with the written consent of, the registered owner of the immovable property concerned, as provided in the Immovable Property Transfer and Mortgage Law of 1965, as amended.
A legal mortgage over immovable property is created by an instrument in writing signed by the mortgagor and the mortgagee in the form of Form B (or Form N271) under Annex II of the Transfer and Mortgage of Immovables Law, N 9/1965. Both the mortgagor and the mortgagee (or their duly authorised representatives) must attend the district lands office where the immovable property is located, to declare the mortgage to a qualified officer by presenting the signed instrument (Section 8, Transfer and Mortgages of Immovables Law).
If the mortgagor is a legal entity, it must also file the mortgage under Section 91(3) of the Companies Law, Cap 113, as amended (the “Companies Law”) with the Registrar of Companies, on the prescribed form (ΗΕ24Υ) within the prescribed time limit, which is 21 days from the date of signing and registration of the mortgage with the land office.
For loans to Cypriots, EU members and third-country nationals, the bank always assesses creditworthiness and will make an assessment on the basis of different criteria, including:
Lenders/banks frequently refuse to grant mortgages for properties located in other countries, or to people whose source of income or place of residence is not in the country where the bank is located. However, they are not allowed to discriminate between EU citizens solely on the basis of nationality.
During the registration of a mortgage the borrower will have to pay the mortgage fees, which are 1% of the loan/mortgage, as per the Immovable Property (Fees and Charges) Law, Cap 219.
A company commonly provides a guarantee as security for the payment of the money it owes, provided that the company supplying the guarantee has the corporate power to do so. The guarantee in most cases is the real estate asset. However, the company must provide evidence to prove that it has the financial ability to settle the guarantee (ie, by providing documents, such as financial reports, proving that the company is active and of good standing).
As provided in Article 134 of the Contracts Law, when a borrower fails to perform the obligations secured under the loan/mortgage agreement or fails to pay the debt, the lender may take all the necessary judicial steps against the borrower in relation to the debt or obligation secured and may retain possession of the property. The mechanism for enforcement of a security interest is usually set out in the agreement signed between the borrower and the lender. The security document will specify whether there is a right of sale, appropriation, set-off, realisation or management of underlying assets, or a right to appoint a receiver. The lender may have the option to sell the property subject to the requirement of giving the borrower adequate notice of the sale. If the proceeds of the sale are insufficient to discharge the debt, then the borrower remains liable to the lender for the balance. On the other hand, if the proceeds of the sale exceed the value of the debt owed, then the lender is obliged to pay the surplus to the borrower.
In addition, where a receiver or manager is appointed on behalf of a floating charge holder, the following provisions of the Companies Law apply:
Before enforcing a security interest, the enforcing party must:
This is not applicable in Cyprus.
The lender is not actually the user and/or the beneficial owner of the real estate, and only the user and/or the beneficial owner of the real estate can be liable under environmental laws.
When a company goes into liquidation, any conveyance, charge, mortgage, delivery of goods, payment, execution or other act relating to property that took place within a period of six months of the commencement of the winding-up may be considered as a fraudulent preference and be set aside as per clause 301 of the Companies Law.
A preference is considered fraudulent if it is intended to put a creditor in a better position in the event of liquidation of the company than the creditor would have been without such action as per clause 302 of the Companies Law. All creditors who have benefited from a fraudulent preference must repay any benefit they obtained.
Where a transaction constitutes a financial collateral arrangement within the meaning of the Financial Collateral Arrangements Law, 43(I)/2004, the arrangement will not be deemed void if it has come into existence, or the financial collateral has been provided, on the day of the commencement of the winding-up proceedings or reorganisation measures, or within a prescribed period before then.
In addition, when a company is in liquidation, a floating charge that was created within 12 months from the commencement of the winding-up is void, unless it can be proved that the company was solvent immediately after the creation of the charge as per clause 303 of the Companies Law.
This is not applicable in Cyprus.
The government body which is responsible for the issuance of planning permits, approval of building plans, zoning, etc, is the Planning Authority. The main law that regulates the use, planning and zoning restrictions on real estate is the Town Planning Law 90/1972.
However, the bodies responsible for the issuance of building permits for the construction of a building are the local municipality and/or the local community councils of each region, and the issuing of this permit is governed by the Road and Building Regulation Law Cap 96.
There are different regulations regarding the height of buildings, the distance to borders and roads or similar, the type and design of houses, the number of floors, building density, and determinations for open spaces and fences, which all depend on the locality and region in which the building is built and also on the purpose of the building (residential, commercial, industrial, etc).
In order for a real estate building to be utilised, a planning and building permit must be issued. Once both permits have been issued, the relevant authority must issue the certificate of final approval which is submitted at the Land Registry for the issuance of the separate title deed, which also includes the building.
See 2.2 Laws Applicable to Transfer of Title and 4.1 Legislative and Governmental Controls Applicable to Strategic Planning and Zoning.
See 2.2 Laws Applicable to Transfer of Title and 4.1 Legislative and Governmental Controls Applicable to Strategic Planning and Zoning.
The Construction Development Legislation Framework in Cyprus consists basically of the following two laws and “regulations”:
As mentioned above, in order for a real estate building to be utilised, a planning and building permit must be issued. Once both permits have been issued, the relevant authority must issue the certificate of final approval, which is submitted at the Land Registry for the issuance of the separate title deed which also includes the building.
Third parties have the right to participate and object only where the said development has an impact on them and/or affects them and/or their own assets.
Decisions can be appealed through judicial review. This procedure must be initiated within 75 days of the date on which the decision was communicated to the interested party.
A preliminary opinion can be requested from the relevant authorities in relation to a particular project prior to the construction works. Information received from the authorities is not binding. The authorities, prior to the issuance of the building and planning permits, will examine several factors.
In issuing planning and building permits, the relevant authorities impose some terms and conditions for the construction of the development, depending on the region in which this occurs. The certificate of final approval will therefore only be issued provided that the development is constructed according to the terms and conditions imposed in the planning and building permits.
Most of the legal entities incorporated in Cyprus are companies with limited liability. The company’s memorandum defines the aims/goals of the company, including the right of the company to acquire a real estate asset. Therefore, if a company wishes to acquire real estate, it has to include this aim/goal in its memorandum. Otherwise, it will not be able to exercise this right.
It has to be stated clearly on the memorandum of the company that the company has the right to invest in real estate.
There is no minimum requirement for the share capital of a company in Cyprus. Upon registration, the owner of the private limited company is not required to pay a minimum share capital in Cyprus, but it is recommended to do so. The minimum share capital recommended when registering a company in Cyprus is EUR1,000 and each share must have a nominal value of EUR1.
See 5.1 Types of Entities Available to Investors to Hold Real Estate Assets.
The costs of annual entity maintenance and accounting compliance depend on the value of the property and on the annual transactions of the company.
A person, company or other organisation can occupy and use real estate for an unlimited period of time without buying it via:
In Cyprus, the following leases are available:
The above leases are governed by the Contracts Law (Cap 149) which, in essence, has codified basic principles of contract law established under the common law.
Rentals and lease terms are freely negotiable with the landlord and are subject to the offer and acceptance of the potential tenant, subject to the Contract Law. However, the Rent Control Law also applies, to protect tenants from their landlords and, most importantly, to prevent landlords from evicting them too easily. If there is any dispute and/or claim, the appropriate court to solve the dispute is the Rent Control Court, where the tenancy is statutory, and the District Court of Cyprus, where the tenancy is contractual.
Additionally, according to the Rent Control Law, a landlord can request an increase in the rent amount every two years but the increase should not be higher than the maximum 8% set by law.
The Council of Ministers in the Republic of Cyprus issues a decision every two years regarding the maximum rate of increase.
The terms and conditions of the lease agreement are negotiable between the tenant and the landlord subject to the Contract Law.
However, the Coronavirus Act 2020 (CVA 2020) protected tenants and restricted landlords’ enforcement options in the period from March 2020 to the end of March 2022, of both commercial and residential premises. This substantially affected the ability of landlords to recover possession during the COVID-19 pandemic.
See 6.3 Regulation of Rents or Lease Terms.
The landlord, when determining the new monthly/annual rent, may appoint an external and registered evaluator to evaluate the property as per the current market value and condition of the property. It is important to mention that the rent may only be increased based on the agreed percentage within the lease agreement.
VAT is imposed on leased properties at a rate of 19% in the case where the lessee is registered as a VAT taxpayer and carries out taxable transactions.
The benefit of earning rental income which is subject to VAT is that it allows the landlord to claim VAT incurred on the acquisition/construction of the immovable property or expenses incurred for its refurbishment.
The landlord has the right to be exempted from VAT payment on the rented/leased property under certain conditions. In order to exercise this option, the landlord must notify the Cyprus Tax Authorities accordingly. However, if this option is exercised, the rental income will be considered to be exempt from VAT and thus the VAT incurred by the owner will remain as a cost. It must also be considered that once the option not to tax is exercised, it cannot be revoked unless the property is sold to a new owner.
With the payment of the first rent, the tenant usually pays a deposit equivalent to one month’s rent. The deposit is paid to the landlord as guarantee for the good use of the property. At the end of the tenancy, upon completion of the contract, the deposit is refundable after the property has been checked for damages and cleanliness and all utility bills have been settled. Properties are to be returned as given.
If the property is not returned as given there will be a deduction from the deposit to clean the property/fix damages caused by the tenant or their negligence.
If the deposit does not cover the costs, then the tenant is obliged to cover the difference as is specified in the legal rental contract.
In cases where a project comprises several properties such as houses, apartments, studios, etc, then a communal committee is responsible for maintaining and taking care of the project, as per the Immovable Property Law (Tenure, Registration and Value) Cap 224. The committee will calculate the exact amount that corresponds to each property and the landlords and/or tenants are responsible for covering the maintenance and repair fees.
Each unit of the project has a separate meter (electricity, water, sewerage) and the outstanding amount can be paid either electronically or by attending the appropriate authority/government sector and settling the outstanding amount.
Insurance is a matter for agreement between the parties. There is no obligation for a property to be insured. However, if it is insured, the tenant generally insures the contents of the property and the landlord the building.
All the terms and conditions of the agreement are negotiable between the parties, and the agreement is governed by the Contract of Law. For example, a landlord can agree with the tenant to use the property as residential, or not to have pets.
This is subject to an agreement between the parties. However, where the landlord gives permission to the tenant to proceed with any alterations to the property, the landlord may request, at the end of the tenancy period, that the property be restored to its initial condition at the time that the tenant received delivery.
All the terms and conditions are subject to negotiation between the parties.
However, all properties must be leased in the real estate category for which they have been constructed.
If the tenant is a physical person, their bankruptcy does not affect the lease, as long as the tenant continues to fulfil their obligations under the lease.
As stated in 6.8 Costs Payable by a Tenant at the Start of a Lease, a deposit equivalent to one month’s rent is usually paid to the landlord with the signing of the tenancy agreement.
A tenant will obtain the right to occupy the relevant real estate after the expiration and/or termination of the contact given that the tenant has mutually agreed with the landlord that the lease period will be extended without the signing of any legal agreement. In cases where there is no mutual consent to extend the lease period, then the tenant will be considered as a trespasser and the landlord may initiate the process of eviction to recover the property. According to the provisions of the Rent Control Law 1983, the process of eviction of tenants who do not pay their rent has been shortened and owners are able to recover possession of their property in a period not exceeding six months from the date on which they commenced the eviction process.
In particular, the owner must give written notice to the tenant requesting payment of late rentals, within 21 days of service of such notice. When the deadline expires, the landlord acquires the right to file an eviction application with the Rental Control Tribunal.
The said term can be subject to negotiations between the landlord and the tenant. In particular, the parties can agree and include a term in the agreement that the leased premises can be subleased, etc.
Both parties can terminate the lease if the other party is in breach of any of the terms of the lease. For example, the landlord may claim vacant possession of the property if the tenant is in breach of any of the essential terms of the lease, such as failing to pay the rent or being a nuisance to the neighbours or subletting the premises, or part thereof, without authority or deliberately damaging the property. The court is guided by what is reasonable, and the breach must be wilful and ongoing for the court to make an order for vacant possession. For example, no order will be made if the tenant promptly remedies the breach complained of (eg, by paying all rent due, unless there is a history of persistent non-payment, or by paying the cost of any damage to the property).
Leases exceeding 15 years may be registered with the Department of Lands and Surveys, and registration should be effected within three months of the signing of the lease, provided that this is permitted by the lease agreement. Registered leases afford the tenant certain advantages, including the right to “trade” the lease.
See 6.17 Right to Occupy After Termination or Expiry of a Lease.
During the COVID-19 pandemic, the Coronavirus Act 2020 (CVA 2020) protected tenants and restricted landlords’ enforcement options in the period from March 2020 to the end of March 2022, of both commercial and residential premises. It substantially affected the ability of landlords to recover possession during the COVID-19 pandemic.
A lease can be terminated by a third party only if the lease agreement has an impact on the third party or the third party’s property. The third party must apply through the district courts for the termination of the lease agreement.
It is common practice in Cyprus that when an investor intends to purchase an off-plan property or to construct a property, the investor agrees to a fixed amount for the cost of each square metre of the property, based on the specifications requested by the investor and the offer that will be provided by the contractor to the investor. However, where the property is off plan, the purchase price is paid according to the schedule of the construction work and the mode of payment agreed by the parties.
An architect is responsible for the design of the project and a civil engineer is hired to inspect the construction of the project. The civil engineer is also responsible for signing the orders for the completion of each construction stage and informing the investor about the next payment.
Construction risk on a project is managed by indemnification, warranties, limitations of liability and waivers. All of these can be negotiated between the parties and can be included in the agreement.
In cases where the investor wishes to purchase an off-plan property, it is common to agree to stages of completion with specific dates in the construction contract, and the contractor is obliged to provide the investor with a certificate of completion signed by the civil engineer or the architect of the property. If the contractor fails to complete construction of the property, due to any fault on the contractor’s part, then the investor is eligible to receive damages and/or claim compensation for late construction. This compensation amount will be calculated on the percentage that was agreed in the construction contract.
It can be agreed between the parties that a bank guarantee from the contractor must be issued for securing the construction of the project.
When an investor appoints contractors and/or architects to construct real estate, it automatically means that there is a written co-operation agreement between the owner and the contractors and/or architects. If one of the contractors/architects manages to prove to the court that they completed the job they were appointed to do, then the court will issue a court order and will enable the contractors and/or architects to register an encumbrance on the property of the owner due to non-payment. On the other hand, if the owner/investor manages to show and/or prove to the court that they have fulfilled their contractual obligations arising from the agreed and signed co-operation agreement, then they will be able to remove any lien and/or encumbrance on the property.
Every property in Cyprus, either freehold or part of a project, must have a building permit, a planning permit and a certificate of final approval. During the issuance of these permits and the certificate of final approval, the relevant department and/or public authorities will check that all the provisions of the law governing the specific development project have been observed and applied.
The applicable VAT rate on real estate properties in Cyprus is 19% and it is applicable to first-sale properties and to corporate real estate, subject to some exceptions, which have not been used for five years from the date of delivery to the purchaser. The VAT amount is calculated based on the purchase price and it is payable by the purchaser to the seller. If the purchaser declares that the particular property will be their primary and permanent residence, then the purchaser has the right to reduce the VAT to 5%, but the purchaser will be obliged to keep the property under their own name for ten years from the date of approval and will not be able to rent it out and receive a rental income. The VAT approval of 5% can be cancelled at any time during these ten years by the purchaser.
When purchasing a property, the purchaser will be requested to cover the following expenses.
Once the purchaser becomes the registered owner, they will then be obliged to cover the immovable property taxes and the municipality taxes on their new property.
In the case of business premises, the local authority and/or municipality imposes commercial taxes on the business.
Based on the current regulations governing income tax in Cyprus, it is clear that any income is taxable. Any investor and/or owner who owns property and has rental income from renting out their property is obliged to declare this on their tax declaration in the country in which they are a tax resident. If the owner/investor is a tax resident in Cyprus, then the first EUR19,500 is tax free and there is no tax payable to the government. Each owner/investor who is a tax resident in Cyprus must declare all their income from all sources in Cyprus and abroad and pay their income tax, based on the following rates.
Where real estate investors and owners have income-producing rental property, the owner can deduct depreciation as an expenditure on their taxes and this means that they will have the right to reduce their taxable income.
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