Cyprus has gained a reputation as one of the most popular locations for buying real estate for investment purposes, as until 2020 the state leadership offered passports to wealthier investors, who thus gained EU citizenship and a number of benefits linked with. After the European Commission brought to light a number of irregularities, the program was stopped, making great disorder for the Cyprus real estate market.
| Country profile | |
|---|---|
| Land area | 9.251 km² |
| Population | 1.210.000 |
| Population density | 131 |
| Tourist arrivals | 64.117.000 (2019, before Covid measures) |
| Number of transactions | 14.000 of properties (2020) |
Pros and cons of buying real estate in Cyprus
Pros
- The real estate industry in Cyprus has had a significant and, without discussion, favorable impact on the international profile of the island as a very attractive investment destination. In this regard, such favorable exposure has consistently served as the driving force in efforts to promote opportunities offered by real estate on the island.
- At the moment, and from 24 March 2021, the Cyprus Permanent Residence Scheme, in line with amended regulations on foreigners and immigration, allows non-EU citizens and family members to acquire permanent residence status on the island by investing € 300,000 in housing or business real estate, or through the share capital of a company registered in Cyprus.
- With more than 7% of its GDP spent on education, Cyprus invests the third largest amount of money in education among European countries, behind only Denmark and Sweden. Most schools and colleges are based on the American education system, reason why education sector in Cyprus so attractive to international students. It implicates that Cyprus does not only rely on tourism, but also offers other comparative advantages. Thus, about 25,000 university students live in Cyprus, one third of whom are foreign students.
Cons
- After the Turkish invasion of its northern part of the island, division of the island came to place on two separate areas. It is very important to emphasize that Northern Cyprus has a large part of the Greek nationals as landowners, who fled to the southern part. Therefore, the land plots they used to enjoy have been "captured" for half a century could be subject to property fraud for further resale.
Suggestions for purchase proceedings
In Cyprus, our pick to go for is the city of Limassol.
Limassol has many names: “the second capital of Cyprus”, “the coastal capital of Cyprus”, “the Port of Cyprus”, which tells us about the activity that the city enjoys. The main characteristic of the city is its multinationality, as many foreigners inhabit it (not including tourists).
Even in the winter, out of season, the city stays alive and active, and investors who have invested in real estate for renting purposes in Limassol get income all year round. This is not common anywhere else in Cyprus, as "seasonality" could be felt, even in non-maritime Nicosia.
If the decision to own property goes for Northern Cyprus, one should be very careful. In the area of great opportunities in this part of Cyprus, there are also great embezzlements.
Real estate proceedings for foreign legal and natural persons
Foreign legal and natural persons in Cyprus can become property owners but with some restrictions. Namely, a non-Cypriot buyer must submit a request to the Council of Ministers to acquire the property - including a bank guarantee, criminal records, property details and a statement that it is the one and only property in Cyprus. Although the process can take up to a year, there are no restrictions on the use of the property in the meantime, and it is unlikely that application will be rejected. Also, in case of refusal, the buyer can re-apply, and in any case has 17 years to sell the property.
This rule, however, doesn't apply for EU citizens.
Taxes related with purchase of real estate - short overview
VAT is calculated at the rate of 19% at the national level, when real estate transactions are performed by persons registered in the VAT system, in cases of the first real estate transaction.
Property transfer tax:
- 3% for the value of the property €0-85.000
- 5% for the value of the property €85,000-170,000
- 8% for a property value of €170,000 and more
The capital gain tax from the sale of property stipulates that in the case of resale of real estate, it is paid with a withholding tax of 20%, on the difference between buying and selling price of particular property.
EU citizens can acquire real estate without any restrictions, it's straightforward action.
