Costs of buying property in Cyprus

When setting out to buy a property in Cyprus it is essential to allow for buying costs which are average for European countries but may seem high for British and North American buyers.

On average the buyer should allow for an extra 10% on top of the purchase price to allow for tax and professional fees. The seller will need to allow for up to 5%, most of which is the estate agent’s fee.

Buying costs on resale property in Cyprus

Buying costs vary both in total and percentage terms according to the price and type of the property bought. The real estate agent’s commission is paid by the seller and is from 2% to 5% of the sales price.

Legal fees: When using a lawyer for the conveyancing of the property and paperwork with local authorities, you need to set aside about 1% to 2% of the property price.

Property transfer fees: This is only payable on resale property. Property transfer fees are between 3% up to €85,000, 5% for the next portion up to €170,000, and 8% of the value over €170,000. This is then reduced by 50% for resale properties. Hence for an €85,000 property, (€85,000 x 3%) /2 = €1,275.

For a €250,000 property:

(€85,000 x 3%) /2 = €1,275.
(€85,000 x 5%) /2 = €2,125
(€85,000 x 8%) /2 = €3,200
TOTAL                        €6,600

Many estate agents in Cyprus have an online calculator to help you work this out.

However, beware: if the Land Register office considers the price on the contract is undervalued and not in line with the market value of the property, the full property transfer fee may be levied.

Stamp duty: This is calculated on the value of the purchase agreement and currently set at the following rate: €0 to €5,000 — zero; €5,001 to €170,000 — 0.15%; greater than €170,000 — 0.2%. Hence for our €85,000 property above stamp duty would be €120 and for the €250,000 property it would be €408.

Land Registry fees: Usually handled by your lawyer, these tend to be minimal.

Property insurance: If you want credit from a Cypriot bank, you will need to obtain property insurance. Nevertheless, it is one of the ‘hidden fees’ that is forgotten about by purchasers when they get the property in their name. You can shop around for property insurance as you would do in the UK.

Buying costs on new-build property in Cyprus

Value added tax: VAT is only payable on new-build property. VAT is normally 19%, but a reduced rate of 5% is charged if certain conditions are met. It gets complicated, so you will need to be quite sure what rate of VAT you will be paying.

5% VAT is payable if:

• The buyer is an individual, not a legal entity such as a company.
• The property will be the buyer’s primary residence in Cyprus. However, this can also be a holiday home.
• It will not be rented out.
• This is the first property the buyer has bought at 5% VAT.
• The 5% rate applies to the first €350,000 of the property value, but if the property value exceeds €475,000 the whole 19% id payable.
• The 5% VAT rate applies to the first 130 square meters of the property’s area. However, if the total area is larger than 190 square meters the full amount is payable.

For canny readers, these rules may raise more questions. Such as, what counts in the square meterage? There is also a variation according to when the planning permit was obtained. Hence it is vital to ensure you know that the correct rate is applied.

Beware: if you claim the 5% VAT rate and then sell the property within ten years, you will need to pay the remaining 14%.

Other buying costs are as for resale property.

Local property tax (post-purchase)

Bear in mind that as a new property owner you will immediately become liable for local property-based taxes, just like Council Tax in the UK.

This is payable to municipalities and communities. The tax is calculated on the Land Register’s assessment of the value of the property in 2013. For more guidance, head to our taxes in Cyprus page.