June 12, 2009
Buying Cyprus Property
Buying a vacation property has become more than just trendy – it has become an important part of anyone's financial portfolio. People from Western countries are increasingly snapping up vacation properties in the Caribbean, the Mediterranean, and other choice locations in warmer climates.
One island that is seeing renewed interest is Cyprus. Being a relatively new member of the European Community, Cyprus property are also seen a surge in demand because English is widely spoken as a second language.
Being part of the EEC is expected to be a precursor to increased property prices, making Cyprus an excellent long-term investment for real estate. The stable economy is expected to continue to grow as a result.
Investment properties in Cyprus are like tax havens
The exciting news for any property investor is that Cyprus is almost like a tax haven within the European Community. There is no inheritance tax or gift tax, pensions from abroad are taxed at a flat rate of just 5%, interest earned on foreign capital imported into Cyprus is tax exempt, and investment income remitted to Cyprus by foreign nations is taxed at a flat rate of 5%. Even the corporate tax rate is a flat 10%. Cyprus also has signed double taxation agreements with many countries, including the United Kingdom. A Capital Gains Tax of 20% is payable on the sale of immovable property in Cyprus, but no capital gains tax is payable on gains from investments. Personal income tax rates range form 0 - 30%.
Interestingly, there is increasing demand for Cyprus properties from non-traditional sources, including the Middle East, Russia and its former states and United States, as well.
According to Glen Young of SunSeaker Properties, the island has the dual benefits of being popular for both retirees and vacationers. Retirees buy property in Cyprus for their own use, largely to bask in the warm Mediterranean sun and escape the snow and cold winds of winter. The attraction of Cyprus as a second home (or a new first home) is helped by a skilled work force, relatively affordable prices and a friendly, welcoming population.
But Cyprus is also a popular travel and leisure destination, with regular affordable flights from major European cities. Visitors look for quality accommodation, such as villas and apartments can offer. This makes Cyprus property a good investment, earning an income until the owner wants to sell and cash in…or until the owner decides to retire and use the property for his own purposes.
Of course, over 320 days of sunshine certainly don't hurt land values on this Mediterranean island.
Unlike in many other sunshine destinations, the legal system in Cyprus is mostly based on the British legal system and is designed to safeguard the property purchaser. This makes it particularly attractive to UK investors. Once the contract of sale is signed and a deposit is paid, the contract is registered at the land registry office. This procedure protects the purchaser's ownership rights until the title deeds are issued and transferred to his or her name. The contract in the hands of the Land Registry cannot be withdrawn by anyone, and therefore the property cannot be leased, sold, transferred or mortgaged. Only the purchaser himself can alter this status.
Cyprus investment properties might require some patience
With so much going for it, even Cyprus is not perfect. Sometimes it does take patience to buy property in Cyprus. As with many sunny locations, the bureaucrats don't always see the need to rush and paperwork can take longer than an eager buyer would sometimes like.
In the case of buying property "off-plan", it can often take a couple years for the development to be completed…meaning that the buyer might need some bridge financing until the property can be let and income starts rolling in. Mortgages, usually up to 75%, are readily available, and the wise investor will look for one that requires only 30% to be paid down over the period of construction, making financing affordable to average investors.
With a little planning and patience, Cyprus properties are easy to obtain and promise to carry a positive return on investment. Sooner or later, everyone retires; it's never too early to stake out an investment property on your favorite Cyprus beach.