General country information
Cyprus, the third largest island in the Mediterranean is split between the Turkish north and Greek south.
A UN attempt to reunite the island was rejected by Greek Cypriots (who make up 77 per cent of the population) in a 2004 referendum. However, a month later the Greek Cypriot Republic of Cyprus joined the EU: meaning that EU laws now apply to the south side of the island. The (Northern) Turkish side of the island does not have international recognition.
Following a tough few years, the property market in Cyprus is showing signs of recovery in 2015 with interest growing for both holiday homes and investment property.
The Cyprian construction sector saw its second consecutive month of strong growth in March 2015 and a year-on-year increase of 2.7% in terms of building permits issued. According to the Cyprus Statistical Service, 460 building permits were issued in March 2015 compared with 448 in the same month during the previous year. The total area covered by the permits also increased, from 58,870 square metres to 71,301 square metres, which equates to 21.1%, and the value of the permits increased by 14.5% from €61.2m (£44.3m) to €70m (£50.7m).
319 of the permits were for residential buildings, while 73 were for non-residential buildings; the remainder were divided between civil engineering projects, division of plots of land and road construction. The increase in the number of building permits issued, of course, reflects decisions taken 6-12 months ago; however, it is also considered a sign of continuing economic improvement. Lower mortgage rates, housing loan schemes and a drop in energy prices have been cited as factors in the growth of construction activity.
In 2013 the Cyprus government offered an additional 20% density factor for grand scale projects as an incentive to encourage construction. This resulted in many building permits being issued that did not immediately translate into new construction activity. But an upturn in construction is now being seen.
The residential building permits approved in March 2015 will see the construction of 165 new single dwellings and 132 new multiple dwellings, including apartment complexes and townhouses. With 319 residential building permits approved, this is a substantial increase of 53.9% on the 193 residential building permits approved in March 2014.
Rental income tax is low to moderate in Cyprus with rental income exceeding €19,500 taxed at progressive rates. Standard deductions for income-generating expenses are deductible from the gross income.
Capital gains realized from the sale of immovable property are taxed at 20%, with a lifetime exemption of 85,430 if the property was owner-occupied for at least 5 years. There are no inheritance taxes or estate duties in Cyprus. Residents are taxed on their worldwide income at progressive rates, from 0% to 35%.
Total property purchase costs can be high ranging from 6.25% to 23.20% of the purchase price. The buyer pays around of 3.25% to 18.20%, whereas the seller pays 3% to 5% for the agent’s commission. The transfer tax rate ranges from 3% to 8%, depending on the purchase price of the property. If the property is in joint names, the property value is halved, leading to lower transfer fees.
Cyprus is still a popular destination for both holidays and property purchase and with the construction industry showing positive signs it could now be time to look for a bargain, but financial and legal arrangements should be carefully constructed.
Established developers and agents may be the best bet when looking for your dream Cyprus property.
Area: 9,251 sq km
Principal cities: Nicosia, Larnaca
Median age of population: total: 34.4 years, male: 33.4 years, female: 35.5 years (2004 est.)
Language: Greek, Turkish, English
Employment rate: 96.6 per cent (Republic of Cyprus)
Flying time from UK: 4.8hrs Currency: Turkish Lira (North) / Euro (South)
Time difference from UK: +3 GMT
Rate of inflation: 2.67% (2013 est.)
International dialling code: +357
GDP per person: $30,670
Climate: Mediterranean with hot, dry summers and cool winters